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Court ruling could spell the end of DOL overtime rule

Written on Jul 31, 2020

OSCPA staff report

A federal district court late Tuesday imposed a preliminary injunction against Department of Labor overtime rules that were scheduled to go into effect Dec. 1.

An HR and legal expert said the move – along with the transition to a new administration – puts the rule in jeopardy.

Federal District Court Judge Amos Mazzant, an Obama appointee, made the ruling Tuesday in a consolidated lawsuit brought in September by 21 states and a business coalition. OSCPA in October joined more than 400 U.S. organizations in signing a letter opposing the new regulations.

HR and legal consultant Scott Warrick, JD, MLHR, CEQC, said the court ruled the DOL exceeded its authority in adopting this new regulation.

“The judge said Congress gave the DOL the right to define which workers are considered salaried, but only based on the duties they performed, not by how much they were paid,” Warrick said.

Judge Mazzant wrote that “Congress defined the … exemption with regard to duties, which does not include a minimum salary level. The department’s role is to carry out Congress’s intent. If Congress intended the salary requirement to supplant the duties test, then Congress, and not the department, should make that change.”

The court held that, according to previous Supreme Court and 5th Circuit rulings, if Congress wanted to give the DOL the power to make this change, it would have expressly delegated this authority to the DOL, not implicitly, as the Obama administration argued.

Warrick said the DOL can appeal the ruling to the 5th Circuit Court of Appeals, but a Trump administration would likely drop any such appeal.

“President Elect Trump has spoken out against this new regulation and has aligned himself with the 21-state coalition that filed this lawsuit in the first place,” Warrick said. “Therefore, this injunction may prove to be the death of this regulation as the presidency changes hands. But we will have to wait and see.”

The Ohio Society of CPAs will continue to keep you informed on this developing story.