In-House Advisor

December 1 Overtime Final Rule on Hold

November 23, 2016


On November 22, the U.S. District Court for the Eastern District of Texas granted the request of 21 states to temporarily halt the effective date the U.S. Department of Labor’s Final Rule (“Final Rule”) raising the salary threshold to qualify for the white collar exemptions from minimum wage and overtime requirements from taking effect. Accordingly, the Final Rule will not take effect on December 1, 2016.

In granting the emergency injunction, in State of Nevada v. United States Department of Labor, Judge Amos Louis Mazzant III found that the Final Rule was “unlawful” for several reasons and stated that

“[d]ue to the approaching effective date of the Final Rule, the Court’s ability to render a meaningful decision on the merits is in jeopardy.”

At this point, the preliminary injunction will allow the Court to determine whether the DOL had the authority to issue and implement the Final Rule and to assess the Final Rule’s validity. The DOL may also pursue an appeal of the preliminary injunction order. In any event, it may be a while before we know whether employers will be required to comply with the Final Rule or whether they will be relieved of any obligations under the Final Rule.

What does this mean for employers right now?

For those employers who have undergone a review of exempt and nonexempt classifications:

  • If increases in salary were planned to meet the new salary threshold for employees whose job duties clearly fell into the recognized professional, administrative and executive white collar exemptions, the salary increases can be put on hold. Of course, if employers had already communicated to employees that they would be receiving raises, such employers may have an internal public relations issue, depending on how the raises had been communicated to the employees.
  • If a change in classifications was as a result of a review of the job duties, then employers should go ahead with the reclassification, since the job duties tests for qualifying as an exempt employee under the FLSA is not likely to significantly change.

For those employers who have not undergone any review of exempt and nonexempt classifications, now may be a good time to consider a review, simply to confirm that the job duties tests for qualifying as an exempt employee under the FLSA are met.

For all employers, it’s best to remain alert for any changes in this temporary hold.

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