News

Motion filed in Federal Overtime Case

Jan 25
2017

Yesterday, a motion was filed in the Fifth Circuit U.S. Court of Appeals in the federal overtime rule case. The amicus brief was signed by the Texas Restaurant Association, along with the National Restaurant Association, National Retail Federation, National Auto Dealers Association and dozens of Texas Chambers of Commerce for a total of 60 other groups. The brief argues that members face significant monetary costs and regulatory burdens as result of the new overtime rule set forth by the Department of Labor (DOL). Read the motion here.

Back in November 2016, just ten days prior to the implementation date of the DOL’s new federal overtime rule, a federal judge in Texas put the brakes on, issuing a temporary injunction, preventing the new salary regulations from taking effect on December 1st.

The new regulation would have increased the minimum salary threshold for overtime exemptions from $23,660 annually to $47,476 annually.  This would mean that for a restaurant to lawfully exempt an employee from overtime, that employee will likely have to earn an annual salary of at least $47,476.

In September of 2016, 21 states and a number of chambers of commerce and trade associations, including the Texas Restaurant Association, sued the U.S. Department of Labor in an effort to stop the new overtime regulations.  

In the ruling, the judge stated that it was improper for the USDOL to adopt a salary test that categorically excludes a substantial number of workers who meet the exemptions’ duties-related requirements. Although he acknowledged that Congress delegated definitional power to the agency with respect to these exemptions, he concluded that the USDOL overstepped its authority.

While the new overtime rules did not take effect on December 1, and the current salary threshold of $23,660/year ($455/week) remains the law, employers must make sure that an employee meets the duties test in order to be exempt from overtime. Manager exemptions under the federal overtime provisions require that an employee meet both the salary test and the duties test.

A number of measures have been introduced in Congress to prevent or stall the rules changes. One bill would have repealed the proposed rule, while another bill would have staged in the salary increase over three years. Another bill would push the date that the full increase would take effect to 2019, introducing more forgiving gradual increases over a period of time.

As this case and legislation continues to develop, TRA will monitor developments and keep our members informed. For more information, contact Kenneth Besserman, TRA General Counsel (800) 395-2872 or EMAIL.

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