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Contractors welcome judge’s blocking of Obama overtime rule

Sources: Associated Builders and Contractors, Washington, D.C.; CP staff

A Department of Labor (DOL) Wage and Hour Division rule doubling the Fair Labor Standards Act (FLSA) salary threshold for employees exempt from overtime pay—and automatically raising the bar on three-year intervals—will not take hold on a December 1 target, owing to a U.S. District Court for the Eastern District of Texas preliminary injunction order.

“Construction contractors are pleased that the court has stepped in to provide relief from another overreaching and burdensome regulation from the Department of Labor,” says ABC Vice President of Legislative and Political Affairs Kristen Swearingen. “By dramatically increasing the minimum salary threshold for exempt employees, the Department’s overtime rule would have taken workplace flexibility away from employees and may have required some employers to consider switching certain employees from salaried to hourly positions.”

“The rule would have a significant impact on commercial and industrial construction projects in particular, since they often last longer than three years and are carefully planned to stay on time and under budget. The injunction will protect employers from being forced to speculate which of their employees may be considered non-exempt under a salary threshold that could change in the middle of a multiyear construction project.”

The Wage and Hour Division rule raised from $455 to $921 the weekly earnings level at which FLSA-defined executive, administrative or professional employees (EAP) are exempted from overtime pay eligibility. Affecting up to 4.2 million workers, it fulfilled President Barack Obama’s March 2014 memorandum, “Updating and Modernizing Overtime Regulations.”

“Under the premise of updating regulations related to the FLSA, DOL has disregarded the actual requirements of the statute and imposed a much-increased minimum salary threshold that applies without regard to whether an employee is actually performing ‘bona fide executive, administrative, or professional’ duties,” writes District Court Judge Amos Mazant, III. “DOL’s use of, and conclusive emphasis on, the salary test defies statutory text, Congressional intent, and common sense. One would think—as the statute indicates—that actually performing white collar duties would be the best indicator of white collar exempt status. Instead, DOL relegates the type of work actually performed to a secondary consideration while dangerously using the ‘salary basis test,’ unencumbered by limiting principles, as the exclusive test for determining overtime eligibility for EAP employees.”

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