The case, State of Nevada v. DOL, was presided over by Judge Amos Mazzant, an Obama appointee to the United States District Court for the Eastern District of Texas. The lawsuit was filed by the Attorneys General for Texas and Nevada and was joined by 19 other states. The states alleged that the DOL’s overtime rule is illegal because the minimum salary threshold of $47,476 makes millions of EAP employees’ non-exempt when their duties clearly qualify them to be treated as exempt.
The Court agreed, finding that the minimum salary level and the automatic updating mechanism in the new regulations are without statutory authority under the Fair Labor Standards Act (“FLSA”). Essentially, the Court concluded that the new rule imposed a de facto minimum wage requirement for EAP employees of $47,476, which exceeds the DOL’s authority under the FLSA and is contrary to Congressional intent. Under the FLSA, bona fide EAP employees are exempt from minimum wage and overtime requirements.
The decision is a blow to the president’s overtime regulation, which was intended to boost workers’ paychecks in the face of stagnant wages. Even if the Court ultimately restores the new overtime rule, it is likely to be revised by President-Elect Trump through additional rulemaking or legislation.
About The Authors. This alert was prepared for Broad Reach Benefits by Stacy Barrow and Mitch Geiger. Mr. Barrow and Mr. Geiger are nationally recognized experts on the Affordable Care Act. Their firm, Marathas Barrow & Weatherhead LLP, is a premier employee benefits, executive compensation and employment law firm. They can be reached at ” sbarrow@marbarlaw.com or mgeiger@marbarlaw.com
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