DOL Final Overtime Rule – Ain’t No Cure for the Summertime Blues (Yet)

Just like Eddie Cochran originally crooned from long ago, followed by other notables who covered it, the summertime blues could be setting in for those who are wondering the fate of the final overtime rule under the Trump Administration, and in light of a recent Chipotle Mexican Grill employee’s lawsuit.

Originally set to take effect December 1, 2016, raising the salary threshold level for exempt employees to $47,476, many employers felt Christmas came early when a Texas District Court Judge issued a nationwide preliminary injunction in November preventing the DOL from enforcing the salary requirement. The Obama Labor Department in turn appealed this injunction and it is still pending. Since the inauguration of President Trump, the department has been granted three extensions to file its reply brief, giving the administration time to further evaluate the position it will take with the Obama overtime rule. The latest extension gives the Department of Labor until June 30, 2017.

The fate of the overtime rule will be one of the first major decisions the new Secretary of Labor will need to make. At a recent U.S. Department of Labor budget hearing on June 7, Secretary of Labor, Alexander Acosta, provided insight as to the DOL’s plans. During his testimony he stated the Department plans to file a request for information (RFI), in the next few weeks seeking comments and information from the public in connection with the overtime rule and the salary threshold. Secretary Acosta testified that the manner in which the final salary level of $47,476 per year was done “created a shock to the system.”  But, he noted, it is a “problem” when the dollar amount of the salary level remains unchanged “because life gets more expensive.” These echo prior comments from Secretary Acosta. During his confirmation hearing in March, he questioned the $47,476 salary increase, but indicated he was open to a more reasonable salary level – “somewhere around $33,000.”

Also on June 7, despite the current Texas Court preliminary injunction, an employee from the burrito chain Chipotle filed a lawsuit claiming the fast-food chain failed to correctly pay its workers overtime under the Obama administration’s overtime rule. At question is the injunction’s scope. Carmen Alvarez, the lead plaintiff in the suit, claims that Chipotle was still required to comply with the overtime rule as of December 1, 2016. The complaint states that the Texas Court’s injunction didn’t halt the rule’s effective date, or prevent parties who weren’t part of that lawsuit to bring private actions against their employers.

In an interview with SHRM Online, management attorneys said that businesses should not change how they’ve addressed the enjoined salary threshold, and instead sit tight. There seems to be agreement among this group that despite this lawsuit, the Texas Court injunction does indeed apply to all employers and employees in all states. Kathleen Anderson, an attorney with Barnes & Thornburg in fort Wane, IN, and Columbus, OH, noted that employers shouldn’t lose any sleep over this lawsuit. If anything, the heart of the case is the independent question of whether Alvarez, as a Chipotle apprentice, was properly classified as exempt based on the job duties performed. Brian Paul, an attorney with Michael Best in Chicago, still advised employers to still keep an eye on the case.  “If the court refuses to dismiss the lawsuit against Chipotle, there will be a rush of plaintiffs on the courthouse steps,” he said. For the full article, please visit the link in the button below.

Chipotle Worker’s Lawsuit

As summer sets in, soon we’ll know whether the DOL will move forward with the appeal, go through a new process with an alternative salary threshold, or take some other action altogether. As for the recent case against Chipotle, employers should keep an eye on it. Despite these developments, it’s always a good idea to keep job descriptions updated and jobs correctly classified as exempt or non-exempt based on the actual duties performed.

As Eddie, The Who, or Jimi Hendrix sang…“Sometimes I wonder what I’m a-gonna do but there ain’t no cure for the summertime blues.” Better adjust that dial and stay tuned…