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The Obama Administration’s Overtime Final Rule: Unlawful and Revisited

On October 30, 2017, the Department of Labor (the “Department”) filed a notice to appeal a decision by Judge Amos Mazzant of the Eastern District of Texas, holding that the Overtime Final Rule (“Final Rule”) was unlawful. The Department announced that once the appeal is docketed, the Department of Justice will file a motion with the United States Court of Appeals for the Fifth Circuit to hold the appeal in abeyance while the Department revisits the Final Rule and undertakes further rulemaking.

The Final Rule was set to be effective on December 1, 2016. Over 55 business groups and 21 states challenged the Final Rule by filing actions, which were consolidated, in the United States District Courts in Texas. State of Nevada v. United States Department of Labor, No. 4:16-cv-731; Plano Chamber of Commerce v. Acosta, No. 4:16-cv-732.

On November 22, 2016, Judge Mazzant granted the State Plaintiff’s Motion for Preliminary Injunction, thereby enjoining enforcement of the Final Rule on a nationwide basis. The Department filed a notice to appeal the injunction, but the Department did not actively defend the Final Rule after President Trump took office.

Also pending before Judge Mazzant was Business Plaintiff’s Motion for Summary Judgment regarding the validity of the Final Rule. On August 31, 2017, the judge issued an opinion and order holding that the Final Rule was unlawful. Judge Mazzant concluded that the Department did not have the authority to use solely a salary-level test to affect changes to the overtime exemption of employees functioning in bona fide executive, administrative, or professional capacities. According to Judge Mazzant, it was Congress’ intent to exempt from overtime pay employees who perform “bona fide executive, administrative, or professional capacity” duties. Thus, the Department had to also consider the duties of employees employed in bona fide executive, administrative, or professional capacities in making changes to the availability of the exemption.

A few changes that the Final Rule, now invalid, would have made if enacted include: (1) an increase of the annual salary threshold for an overtime exempt position to $47,476; (2) an automatic updating mechanism that adjusts the minimum salary level every three years[1]; (3) the use of nondiscretionary bonuses to satisfy up to 10% of the general salary threshold (if incentives were made on a quarterly or more frequent basis); and (4) an increase of the annual highly compensated employee’s salary threshold from $100,000 to $134,004.

Looking Forward: Employers should note that the Final Rule will not take effect for now but should seek counsel regarding this issue. Given that the DOL will be conducting further rulemaking, the Final Rule likely will not survive as written. We will continue to monitor developments on this issue and provide an update.

For more information on this subject, please contact a member of Benesch’s Labor & Employment Practice Group.

Peter Kirsanow at pkirsanow@beneschlaw.com or 216.363.4481.

Nancy Chawla at nchawla@beneschlaw.com or 216.363.4549.


[1] Because the Court determined that the Final Rule was unlawful, the Court also held that the automatic updating mechanism was unlawful.

Continue reading “The Obama Administration’s Overtime Final Rule: Unlawful and Revisited”

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DOL Requests Extension of Final Disability Claims Rule To April 1, 2018

By: Joseph P. Yonadi, Jr.

On October 10th the Department of Labor (DOL) proposed to extend by 90 days the applicability date for the Final DOL Claims Procedure Regulations (Rule) from January 1, 2018 to April 1, 2018.

At the beginning of this year, the Final Rule went into effect on January 1, 2017.  However, the applicability was set for January 1, 2018 in order to give enough time to plan sponsors and claims administrators to update their claim procedure processes caused by the Rule.  Please see the Benesch Law Client Bulletin explaining the changes contained within the Rule here. Continue reading “DOL Requests Extension of Final Disability Claims Rule To April 1, 2018”

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EEO-1 Pay Data Collection Suspended Indefinitely

Employers can breathe a sigh of relief. On August 29, 2017, the Equal Employment Opportunity Commission’s (EEOC) Acting Chair announced that the Office of Budget Management (OBM), per its authority under the Paperwork Reduction Act (PDA), had immediately stayed the EEOC’s pay data collection components of its EEO-1 Report, also known as the “Employer Information Report,” that was to otherwise become effective on the next filing deadline of March 31, 2018. Continue reading “EEO-1 Pay Data Collection Suspended Indefinitely”

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Federal Judge Strikes Down ‘White Collar’ Overtime Rule

A federal judge in Texas has invalidated a Department of Labor rule that would have made more than 4 million “white collar” workers eligible for overtime pay, holding that the agency overstepped its authority by adopting a salary-based test that supplants the actual duties of workers. Continue reading “Federal Judge Strikes Down ‘White Collar’ Overtime Rule”

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D.C. Circuit Provides Additional Support For Specialty Healthcare, Union-Friendly Micro-Units

The U.S. Court of Appeals for the D.C. Circuit has sided with the National Labor Relations Board in affirming the union-friendly practice of “micro-unit” organizing.  The D.C. Circuit’s opinion issued in Rhino v. NLRB is unwelcome news for employers who were hoping the federal appellate court would reject the organizing practice made possible in 2011 when the Board issued its controversial Specialty Healthcare decision.  Continue reading “D.C. Circuit Provides Additional Support For Specialty Healthcare, Union-Friendly Micro-Units”

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New OregonSaves Retirement Program Impacts Employers with Oregon Employees

On July 1, 2017, OregonSaves Retirement Program (“OregonSaves”) went into effect. OregonsSaves is sponsored by the State of Oregon, and is a state-run automatic Roth Individual Retirement Account (“IRA”) for private-sector employees.

OregonSaves will operate such that employers who do not sponsor a qualified retirement plan will be required to automatically enroll employees into the OregonSaves program, and employees will be required to contribute 5% of their compensation to a Roth IRA account. However, employees will be able to opt-out, or choose a different savings rate. After the employer completes the initial employee registration to set up its employees’ Roth IRA accounts, its ongoing obligations are limited to providing OregonSaves update information to its employees, and to make ongoing payroll deductions. Employers are not required to make contributions under OregonSaves. Continue reading “New OregonSaves Retirement Program Impacts Employers with Oregon Employees”

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IRS Retirement Plan Guidance Simplifies Pre-Approved Plans and Provides Roadmap for Individually Designed Plan Conversion

In Revenue Procedure 2017-41, the IRS makes significant changes to the procedures that it will use in reviewing and approving “pre-approved” retirement plans.  The revenue procedure applies to almost all types qualified retirement plan, including 401(k) plans, ESOPs, profit sharing plans, pension and cash balance plans.  Although this revenue procedure does not apply to tax-sheltered annuity [Section 403(b)] plans, the IRS, in Revenue Procedure 2013-22 separately established a pre-approval program for Section 403(b) plans.  By liberalizing the types of plans and the design options that will it will consider as pre-approved, the IRS is encouraging adopters of individually designed plans to consider the adoption of a pre-approved plan in the future. Continue reading “IRS Retirement Plan Guidance Simplifies Pre-Approved Plans and Provides Roadmap for Individually Designed Plan Conversion”

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Medical Marijuana User’s Disability Discrimination Claim Survives Employer’s Motion to Dismiss in Massachusetts

By: Shannon Byrne and Pete Kirsanow

In a decision that is the first of its kind, the Supreme Judicial Court of Massachusetts reversed the dismissal of a state law disability discrimination claim arising from an employee’s request for a reasonable accommodation in the form of a waiver of the employer’s drug policy.  (Barbuto v. Advantage Sales & Mktg., LLC, Mass. No. SJC-12226, 2017 Mass LEXIS 504 (July 17, 2017)).  This decision is the first time a court has held that state medical marijuana laws protect employees who use medical marijuana as a treatment for a disability, despite the requested accommodation being illegal under federal law. Here, the complaint alleged that the employee’s Crohn’s disease resulted in her inability to maintain a healthy weight without the use of medical marijuana.  The employee was terminated for failing a drug test even though she told the employer of her medical marijuana use.  In response to the resulting lawsuit, the employer moved to dismiss by arguing the employee failed to state a claim of handicap discrimination for two reasons: (1) she could not be a “qualified handicapped person” because the accommodation she sought, use of medical marijuana, must be per se unreasonable because it is illegal under federal law; and (2) even if she could be a “qualified handicapped person,” she was terminated for failing a drug test that all employees must pass, not because she was disabled.  Continue reading “Medical Marijuana User’s Disability Discrimination Claim Survives Employer’s Motion to Dismiss in Massachusetts”

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Labor Department Plans to Revise “White Collar” Overtime Rule

The U.S. Department of Labor (“DOL”) plans to revise its pending overtime rule, which would have more than doubled the minimum annual salary for workers in “white collar” executive, administrative and professional positions to be “exempt” from eligibility for overtime wages. Continue reading “Labor Department Plans to Revise “White Collar” Overtime Rule”

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As Supreme Court Declines Opportunity to Review Closely Watched Union-Friendly Decision, Micro-Units Remain a Threat to Employers—For Now.

Representing the latest in a series of significant labor law developments in an already busy month of June, the United States Supreme Court declined to review the Fifth Circuit’s controversial, pro-union decision in Macy’s v. NLRB this Monday.   The high court’s decision not to weigh in on the closely-watched case stands as a decidedly  unwelcome development for employers, as Supreme Court review would have presented an opportunity to overturn the National Labor Relation Board’s (“NLRB” or “Board”) now-infamous 2011 Specialty Healthcare decision, which approved union organizing of so-called “micro-units.” Continue reading “As Supreme Court Declines Opportunity to Review Closely Watched Union-Friendly Decision, Micro-Units Remain a Threat to Employers—For Now.”