The US District Court for the Eastern District of Texas [official website] on Thursday ruled [opinion, PDF] that the United States Department of Labor [official website] overstepped its authority when it increased the minimum salary level for exempt employees from $23,660 annually to $47,476 annually. The court found that Congress had intended to exempt employees who work in a “bona fide executive, administrative, or professional capacity” from overtime pay requirements. The court determined that by focusing exclusively on the employee’s salary as the basis for exemption, the Department had impermissibly ignored the employee’s duties.

Congress unambiguously directed the Department to exempt from overtime pay employees who perform “bona fide executive, administrative, or professional capacity” duties. However, the Department creates a Final Rule that makes overtime status depend predominately on a minimum salary level, thereby supplanting an analysis of an employee’s job duties. The Department estimates 4.2 million workers currently ineligible for overtime, and who fall below the minimum salary level, will automatically become eligible under the Final Rule without a change to their duties. … Because the Final Rule would exclude so many employees who perform exempt duties, the Department fails to carry out Congress’s unambiguous intent.

The $47,476 annual salary was determined by taking the 40th percentile of full-time salaried workers in the lowest wage region of the country. Suggesting that an inflation-based adjustment to the salary limit would alter its decision, the court acknowledged that the Department could continue to use “a permissible minimum salary level as a test for identifying categories of employees Congress intended to exempt.”

The Department of Labor published[text] the new salary level in May 2016, which would have made 4 million more Americans eligible for overtime pay, after then-President Obama directed the department [presidential memorandum] to update the overtime regulations. In December 2016, the Obama administration appealed [JURIST report] an earlier preliminary injunction [JURIST reports] halting application of the rule. In September 2016, twenty-one states including Texas and Nevada filed suit [JURIST report] against the Department challenging the overtime regulations.