Club Insider

Federal Court Strikes Down Final Rule

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Paul R. Bedard, EsquirePaul R. Bedard, Esquire

In last September's issue of Club Insider, I wrote about the Fair Labor Standards Act's (FLSA) Final Rule: impending legislation that was, at that time, scheduled to take effect on December 1, 2016. Last September's article focused on how health club owners and operators could prepare for this significant new legislation. However, in November of 2016, Judge Amos L. Mazzant of the U.S. District Court for the Eastern District of Texas stalled this legislation when he issued a preliminary injunction. Following this injunction, the Department of Labor (DOL) promptly filed an appeal, and the Fifth Circuit Court of appeals is scheduled to hear oral arguments later this year. In the meantime, business owners and operators have been left in a state of limbo on this issue.

Recently, the same judge who issued last year's preliminary injunction ruled that the DOL had exceeded its authority and had overreached with the Final Rule. With Judge Mazzant dealing yet another blow to this overtime legislation, health club owners and operators have reason to feel optimistic that there will ultimately be an outcome that is favorable to their interests. However, there will be further legal developments that will need to be closely monitored.

This article is not intended as legal advice. Rather, it is intended to inform health club owners and operators of the latest legal developments as they relate to overtime pay regulations. Widely varying state and local labor laws and case precedents specific to each jurisdiction prohibit one-size-fits-all recommendations. Please consider these comments as merely a guide to help you when you consult your attorney for specific direction.

A Brief History of Overtime Regulations

The FLSA was enacted in 1938. The FLSA mandates that employees are paid overtime when working in excess of forty (40) hours per week unless they are classified as exempt employees. When enacted, the FLSA contained numerous exemptions to the overtime requirement including, "any employee employed in a bona fide executive, administrative or professional capacity." Although the FLSA did not define these terms, Congress delegated to the Secretary of Labor the authority to define these terms through regulations. The Secretary of Labor authorized the DOL to issue regulations that interpret the executive, administrative or professional (EAP) exemption.

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