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Federal Court Invalidates Controversial Obama Era Overtime Rule

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Last Thursday, the U.S. District Court for the Eastern District of Texas formally invalidated the Obama Administration regulation on new overtime pay rules. The overtime rule, finalized in May 2016 and which has been suspended by the same court since last November, would have included:
  • Raising the salary threshold for overtime pay from $455/week or $23,660 to $913/week or rather $47,476 per year (which is less than the proposed $50,440 or $970/week);
  • Increasing the highly-compensated employee threshold from $100,000 to $134,004;
  • Updating the salary threshold every three years, starting in 2020 (will be tied to the 40th percentile of full-time salaried workers in the lowest income region of the country);
  • Amending the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (commissions) to satisfy up to 10 percent of the new standard salary level; and
  • NOT changing the "duties test" for executive, administrative and professional employees (which was originally hinted at in the proposal).
This latest development was made possible through numerous pro-business interests of which NRMCA is closely aligned. The invalidation of the overtime rule is a huge win for the industry. While there are still a few smaller legal issues on the rule working their way through the courts, the larger issue is ultimately put to bed. Moving forward, the Department of Labor has already started crafting a new rule more closely aligned with pro-business ideals. NRMCA will be weighing on the new proposal later this fall.

Click here to read the court ruling, here for more information, factsheets and FAQs on the overtime rule and here to view the 508-page final rule. For more information, contact Kevin Walgenbach at

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