Call to Action:

  • In 2016, the Obama administration expanded the right to overtime pay to more than four million salaried workers who make less than $47,500 per year.
  • The Trump administration distanced itself from the Obama-era rule in court, signaling that it intends to issue a watered-down replacement rule that would protect fewer workers.
  • The Department of Labor is asking for information on the impact of the 2016 overtime rule; now is our chance to tell them that workers deserve to be paid fairly for overtime work.
  • Before September 25, please visit https://www.regulations.gov/docket?D=WHD-2017-0002 and tell the Department of Labor:
    • To implement its 2016 Final Rule on overtime pay;
    • To continue defending the 2016 Final Rule in ongoing litigation; and
    • NOT to propose a replacement rule that would give fewer workers the right to overtime pay.
  • Share your story, especially if you or somebody you know would personally benefit from the 2016 Final Rule's proposal to require overtime pay for salaried workers earning less than $47,476 per year.

Background:

Congress passed the Fair Labor Standards Act (FLSA) in 1938. The law was intended by Congress to extend to most American workers.

Unfortunately, due to decades of bureaucratic neglect at DOL dating back to the Reagan administration, an exemption in the law for high-level "executive, administrative, or professional" employees has grown into a gaping loophole, robbing millions of low- and middle-income employees of the right to overtime pay simply because they're paid a salary.

At issue are the Department of Labor's regulations that define which employees qualify as "bona fide" executive, administrative, or professional employees under the FLSA. To qualify for exemption, the regulations have always provided that employees have to perform certain job duties and earn a certain minimum salary; employees who earn below the salary threshold are automatically entitled to overtime. Since 1975, however, DOL has updated the minimum salary needed to qualify for exemption just once, in 2004 when the Bush administration increased the threshold to its current amount of just $455 per week ($23,660 per year for a full-time worker). Adjusting for inflation, the $23,660 salary threshold set in 2004 was far less than salary thresholds set in earlier DOL updates, therefore covering significantly fewer workers:

By 2014, the $23,660 salary threshold only covered the bottom 8 percent of salaried workers in the United States, and had fallen below the federal poverty threshold for a family of four.

In March of 2014, President Barack Obama instructed the DOL to update its federal regulations governing the FLSA's so-called white collar exemptions. Following a year-long rulemaking with nearly 300,000 supportive comments from the public, DOL issued a Final Rule in 2016 enacting an increase to the minimum salary threshold from the current $23,660 amount to a new level of $47,476 per year. Moreover, the 2016 Final Rule included a mechanism to automatically update the salary level every three years based on wage growth, ensuring that the overtime rights of salaried workers would never again fall victim to the incompetence or hostility of future DOL administrations.

The 2016 Final Rule was scheduled to take effect on December 1, 2016. If it had gone into effect, more than 4.2 million salaried workers earning between $23,660 and $47,476 would have been newly entitled to overtime pay when they worked more than 40 hours in a week. The rule would have also benefited 8.9 million other workers who should already receive overtime pay from their employers, but often don't. As a consequence, affected workers would have likely received raises to maintain their exempt status or fewer unpaid overtime hours, forcing employers to hire more workers to spread around work. Even critics of the overtime regulation like the National Retail Federation conceded that it would create jobs.

In the fall of 2016, several Republican-controlled states and a coalition of business groups filed suit against DOL in Texas, hoping to find a sympathetic judge in the most conservative federal circuit willing to throw out the rule. Legal observers thought it "unlikely" the lawsuits would succeed, but the plaintiffs hit the jackpot: a conservative district court judge issued a nationwide preliminary injunction against the rule just eight days before it was supposed to take effect, and hinted strongly that he would invalidate the rule after further proceedings. Most radically, the judge's injunction order cast doubt on DOL's legal authority to include any salary threshold in its regulations defining the white collar exemptions, notwithstanding the many decades of regulatory history on DOL's side.

President Obama's Department of Justice filed an immediate appeal in response to the injunction order, but had no chance of resolving the litigation before President Trump's Inauguration. Earlier this month, the Trump administration formally clarified their position on the rule in a reply brief submitted to the Fifth Circuit Court of Appeals: while DOL continues to believe it has the authority to set a salary level in its regulations, it "has decided not to advocate for the specific salary level ($913 per week) set in the final rule at this time and intends to undertake further rulemaking to determine what the salary level should be."

On July 26th, DOL published a Request for Information (RFI) to formally begin the process of proposing a replacement rule. The comment period ends at 11:59 pm on September 25th.

Signs of Hope:

There is some good news to report. First, because the nationwide injunction against the 2016 Final Rule came so late, many employees received raises in anticipation of the rule. With few exceptions, most employees have kept those raises. Second, there is some ambiguity about the scope of the nationwide injunction. A group of employee plaintiffs recently filed suit in New Jersey, arguing that the nationwide injunction order did nothing to stop the rule from actually taking effect as far as any third parties are concerned. Although the entire case depends on a parsed reading of the injunction order's language, the statutory arguments invoked against the overtime rule in Texas looked no less frivolous before the judge in that case.

Third and most importantly, workers dodged a huge bullet when Trump's first nominee for Labor Secretary, fast food mogul Andy Puzder, withdrew from consideration. Puzder had campaigned militantly against the 2016 overtime rule; his replacement, former law school dean R. Alexander Acosta, has appeared far more reasonable, acknowledging in Senate testimony that "it's unfortunate that rules that involve dollar values can sometimes go more than a decade and sometimes 15 years without updating, because life does become more expensive over time." The fact that Trump's DOL wants to increase the current $23,660 threshold at all is a cause for celebration; perhaps the administration can be persuaded to go further and defend the entirety of the 2016 Final Rule, if it perceives overtime pay as a priority for the President's populist base.

To that end, please comment passionately but respectfully in support of the Department's 2016 Final Rule on overtime pay. This particular issue may be one instance where progressives can catch more flies with honey than vinegar.