Obama’s Overtime Rule—A Game of Texas Hold’em.

Well, it’s September, and a Texas federal judge just struck down a 2016 rule put forward by the Obama administration that doubled the salary threshold under the Fair Labor Standards Act for workers to qualify for white collar exemptions for overtime pay. It’s a game of Texas Hold’em, so place your bets employers! There are three stages in this card game—the “flop,” the “turn,” and the “river.” I just love gambling jargon—so frontier.

In Texas Hold’em, each player is dealt two cards only each sees. For purposes of this metaphor which I’ll no doubt strain to its limits, let’s consider the Obama Administration’s rule your two cards, because only you know how many workers are affected by the new salary threshold, which the Obama rule nearly doubled to just over $47,000 per year. In the card game, “the flop” is the dealing of the next three “community” cards every player sees and it significantly sets the stage in terms of your hand, your leverage, and your betting strategy. Here, the “flop” was that this Texas judge, the same one I’m blogging about now, U.S. District Judge Amos Mazzant, earlier entered an injunction against enforcement of the rule, about which I blogged previously. Stick-up Overtime Class Action. That meant that no one was permitted to apply it or enforce it. Period. That’s the power of a federal court. Entering an injunction means that Judge Mazzant was already persuaded that Obama’s rule was unlawful, more or less.

The “turn,” the next single card dealt that everyone sees, was that Judge Mazzant issued on the last day of August an order granting summary judgment to the Plano Chamber of Commerce, more than 55 other business groups, and 21 states in which he found that the “significant increase” would essentially render meaningless the duties, functions and tasks an employee performs if their salary falls below the new minimum salary level. Judge Mazzant said the salary level set by the Department of Labor (“DOL”) was so high that it flouted Congress’ intention that the overtime exemption apply to employees who perform “bona fide executive, administrative or professional capacity,” or EAP, duties. Some are speculating whether this ruling calls into question whether the DOL even has the power to set a salary threshold at all. But a close reading of the order shows that the Court was concerned with how significant the increase was without congressional input. Still, where does one draw the line between administrative rule making and legislation? Because Mitch McConnell wasn’t playing cards in those days. He had long since folded.

In the card game, the final stage is the “river.” That’s the final community card dealt that again every player sees. And we don’t know what we’ll be dealt. Besides the proceedings before Judge Mazzant, a simultaneous proceeding is pending before the Fifth Circuit Court of Appeals over whether Judge Mazzant correctly issued a preliminary injunction in November 2016 blocking the rule in the first place. The Trump DOL filed a brief in June 2017 telling the Fifth Circuit that it would not seek to reinstate the Obama DOL’s salary level. The Trump DOL, however, also told the appellate court that it should overturn Judge Mazzant’s finding that the agency lacks the authority to set any salary test at all. The Fifth Circuit could issue a ruling that says the Texas judge was wrong. That could be the final card in this hand, the river.

But the final card could also be a new rule issued by the Trump administration. Although Labor Secretary Alex Acosta didn’t tip his hand during his confirmation hearing, he did tell lawmakers that the 2004 salary level — $23,660 — was due for an update in some capacity, even if the level set by the Obama DOL was too high. Arguably, a new rule with a new salary level would assert the DOL’s authority while trying to stay within the Texas limits, or whatever. Few argued against the notion that the 2004 level is below the poverty line for a family of four; even business groups and employers who were against the salary level set by the Obama administration have supported the need for a “modest increase.”

For now, remember that the white collar exemption has two parts: the salary level or basis, and the duties, functions, and tasks analysis the Texas judge believed would be overtaken by a doubling of the threshold. It’s fascinating that federal courts could embroil themselves in such notions as how much compensation ought to disqualify a worker from overtime compensation. But, as Kenny Rogers taught us, know when to hold ‘em, know when to fold ‘em. Wow, I can’t believe Kenny just made it into this blog. But seriously, hold on. Let’s wait for the river. It flows. We can make our final bets once we see where.

The author, Peter Rutledge, is an Employment Lawyer and Partner at Rutledge Law, Greenville, SC. You can contact him via these channels:
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It’s fascinating that federal courts could embroil themselves in such notions as how much compensation ought to disqualify a worker from overtime compensation.

–Peter Rutledge, Rutledge Law
2018-04-24T21:10:04+00:00