DOL’s Overtime Rule Struck Down

On August 31, 2017, a Texas federal judge invalidated the Department of Labor rule which would have drastically increased salary minimums required under the federal Fair Labor Standards Act.  That rule would have nearly doubled the federal “exempt” salary, moving the minimum salary threshold from $23,660 to $47,476.  Finding that the increase was so high that it effectively eliminated the duties test, the judge held that the rule was invalid as a matter of law.

The result of this decision is that the federal salary minimum will remain at the $23,660 mark.  Though the ruling could be appealed, this seems unlikely, at least for the moment, given that the Department of Labor is decidedly pro-employer under President Trump.

Good news?  Of course.  But not so fast with the celebrating in California.

Among the handful of employment-related bills proposed this legislative session was AB 1565.  AB 1565 was specifically drafted once it became apparent that the new DOL salary minimums might not be enforced.  Under AB 1565, California employers would only be able to classify an employee as exempt if (among other things) the employee was paid the greater of either two times the state minimum wage or …. Guess How Much? …. $47,476.

The legislative deadline for submitting bills to the Governor for signature is September 15.  Following this, the Governor has until October 15 to either sign or veto the bills he has received.

AB 1565 wasn’t the only bill that warrants notice from an employment law perspective.  Other significant proposed legislation includes the following:

  • SB 63: Requires employers with 20 or more employees to provide up to 12-weeks of baby bonding leave
  • AB 1008: California’s “Ban the Box” legislation that prohibits private employers from inquiring about criminal history prior to making a conditional offer of employment
  • AB 1209: Imposes new reporting and publication obligations on employers with respect to salary differentials between male and female employees

Of course, we always welcome pro-employment rulings whether they come from the federal or state bench.  But the recent Texas decision is a good reminder to California employers that federal law is only half of the story.  For those of us in the Golden State, this story is To Be Continued.  Tune in October 15 to find out how it ends!