As we alerted you yesterday afternoon, a federal district judge in Texas issued a preliminary nationwide injunction blocking the Dec. 1, 2016, implementation of new rules from the U.S. Department of Labor (DOL) governing overtime compensation. The ruling stated that the DOL exceeded its authority in making the new rules. Because this is a nationwide injunction, it applies to all states, not just the 21 that filed a federal lawsuit challenging the rules.

 

At issue is the question of which employees qualify for an exemption from the requirement under the federal Fair Labor Standards Act (FLSA) that most employees are entitled to time and a half overtime pay for work in excess of 40 hours in a week. The FLSA exempts from the overtime requirement "any employee employed in a bona fide executive, administrative, or professional capacity," often called the EAP or "white collar" employees. Current regulations require that employees must possess the duties of executives, administrative workers, or professionals and be paid more than a minimum salary. The overtime rule published by the Labor Department in May, and set to go into effect on December 1, would have more than doubled the existing "salary level test" for exempt white collar employees from $455 per week ($23,660 per year) to $913 per week ($47,476 per year).

 

Twenty-one Governors and Attorneys General filed suit in federal court challenging the overtime rule on several grounds. Siding with the states, Federal Judge Amos Mazzant held that the white collar exemption is clearly based on the duties that individual employees perform, and that the Labor Department did not have the authority to create a different or higher standard. Specifically, he ruled: "Congress gave the Department the authority to define what type of duties qualify [for the overtime exemption] - it did not give the Department the authority to supplant the duties test and establish a salary test that causes bona fide EAP's to suddenly lose their exemption 'irrespective of their job duties and responsibilities.'"

 

While this development raises the possibility of delaying or striking down the new rules, the current Administration is likely to appeal, and that appeal could be heard shortly. The eventual outcome is very unclear at this point. NAO has been consulting with our members, our colleagues like the Idaho Nonprofit Center and the National Council of Nonprofits to better understand and advise you on the ramifications of this news.

 

Here's a short list of recommendations that we have:

 

NAO will continue to monitor the situation and communicate additional information as it becomes available. Try to have a calm and restful Thanksgiving holiday and do not forget about the #Giving Tuesday and #OregoniansGive events next week! Click here for more information.