In May 2016, the Department of Labor issued its controversial revisions to the white collar exemptions of the overtime regulations, more than doubling the minimum salary required for exemption; going from $455/wk. ($23,680/yr.) to $913/wk. ($47,476/yr.). A court in Texas subsequently found the rule invalid, and employers have been awaiting the Trump administration's position on the issue ever since. The wait is now over, at least at the moment.
A Federal Judge invalidated the $47,476 salary threshold that the U.S. DOL attempted to implement last year. A Texas Judge who last year temporarily enjoined the D.O.L. from implementing its highly controversial overtime regulations in December, as planned, has issued a final decision declaring them invalid and unenforceable. District Court Judge Amos L. Mazzant, III ruled that the Obama D.O.L. exceeded its authority when it more than doubled the minimum salary level for white collar overtime exemptions. The ruling impacts millions of employees and their employers.
Thousands of employers affected by the US Department of Labor's Minimum Salary Rule for Overtime Pay Exemptions have anxiously awaited the outcome of litigation that blocks the rule from going into effect as intended, on December 1, 2016.
When a federal court in Sherman, Texas issued a nation-wide injunction on November 22nd that blocked the Department of Labor's new overtime regulation, thousands of employers across the country breathed a sigh of relief. The DOL's new rule was to have gone into effect on December 1st and would have more than doubled the minimum salary employers would have to pay employees to qualify them for "white collar" exemptions from the FLSA's overtime and minimum wage requirements. Specifically, the new regulation, issued in May, gave employers just 6 months to either meet a new minimum salary of $47,476, annualized, or $913 per week. Employers unable or unwilling to meet this new salary for executive, administrative, or professional employees, would have had to reclassify them to non-exempt status, track all time worked, and pay overtime for all hours worked over 40 in a work week. Because the trial court's injunction came just days before the new rule was to take effect, many employers had plans in place and some had already communicated, or actually implemented, drastic changes to their pay practices to comply with the DOL's mandate. As a result, these employers still face tough decisions either to stick with or rescind changes already made or communicated to their workforces. To make matters worse, on December 1st (the day its new salary regulation was to have begun) the DOL filed an appeal to overturn the trial judge's order. If successful, the appeal would reverse the injunction and allow the DOL's overtime salary regulation to go into effect at some unknown date.
A federal judge in Sherman, Texas has issued a preliminary injunction which operates nation-wide to bar the Department of Labor's minimum salary rule for certain white collar exemptions from going into effect. Employers have been bracing for drastic changes to their pay practices and exempt/non-exempt job classifications due to a DOL regulation finalized this summer and set to take effect December 1, 2016. This rule more than doubled the minimum salary required to claim certain exemptions from overtime pay. The court's decision to block the rule, issued on November 22nd, came not a moment too soon for thousands of employers facing tough decisions before the rule was to take effect next Thursday.
As of December 1st most employees whose annualized salaries are less than $47,476, will be entitled to overtime pay even though their job duties would otherwise qualify for an exemption as executive, administrative or professional. A federal court in Texas is expected to rule next Tuesday in a lawsuit brought by employer groups seeking to enjoin the DOL's new rule from going into effect on the 1st; however, based on previous rulings in similar suits employers can hardly count on a court ordered reprieve. Consequently, in the final days before sweeping changes are mandated by the DOL's deadline to more than double the minimum salary necessary to qualify for any of the so-called "white-collar" exemptions, employers are scrambling (and our phones are ringing). Because so many employers remain unprepared for the sweeping changes (and exposure to lawsuits and liability) coming just around the corner, this article will identify some common misunderstandings that are leaving thousands of employers exposed - see if any apply to you!