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Saved By The Bell: Overtime Rule Halted

The U.S. Department of Labor’s new overtime regulations, expected to go into effect on Dec. 1, 2016, are now on indefinite hold.

The proposed overtime rules under the Fair Labor Standards Act would have increased the standard salary level of exempted white-collar employees from $23,660 to $47,476. Exemption for highly compensated employees would have gone up from $100,000 to $134,000. It required automatic salary increases every three years based on average salary levels determined by the Bureau of Labor Statistics. It also allowed employees to use commission and other non-discretionary incentive pay to satisfy up to 10% of standard white-collar exemptions.

A U.S. District Court in Texas granted a nationwide preliminary injunction challenging the new rules. This injunction will prevent the DOL from implementing the rule. A large group of businesses sought the injunction on the grounds that the DOL had exceeded its authority in creating the new regulations. It was the contention of these businesses that Congress did not intend salary level to categorically exclude white-collar workers from the exemption i.e. it should not be a “de facto salary-only test.” With a new president taking office shortly, the future of the new overtime rules is unclear.