Overtime Rule Affecting White Collar Exemptions Temporarily Blocked by Federal Judge What This Ruling Means To Employers Ann Barry Hanneman, Simandl Law Group, IBAW Board Member
On November 22, 2016, a Texas federal court issued an injunction temporarily halting the implementation of the Department of Labor’s (DOL) Final Overtime Rule raising the minimum salary requirement of certain white collar exempt employees to $47,476. This Final Rule was set to take effect December 1, 2016. Because of this injunction, however, the implementation of the Final Rule is on hold until a full hearing on the merits of this legal challenge is heard by the court. Recommendations for employers that have not yet taken action on the Final Rule as well as those who have already implemented the adjustments in anticipation of the previously-imposed December 1st deadline are provided below.
The Temporary Ruling and Background The federal judge in the Eastern District of Texas ruled on an emergency motion filed by 21 states (including Wisconsin) and a number of national business groups requesting a preliminary injunction to the DOL’s Final Overtime Rule that increases the required weekly salary level for “white collar” employees under the executive, administrative and professional exemptions of the Fair Labor Standards Act (FLSA) from $23,600 to $47,476. Finding that the FLSA’s white collar exemptions are defined by Congressional action with regard to duties and not salary, the judge granted the preliminary injunction concluding that the DOL exceeded its delegated authority by raising the minimum salary threshold to a level that essentially creates a “salaryonly” test. The judge also addressed the Final Rule’s automatic indexing mechanism for increases in the “required salary level” to maintain exempt status under the FLSA, holding that the provision violates the Administrative Procedure Act’s notice-and-comment rulemaking requirements and ignores the DOL’s prior admissions that such automatic increases are contrary to Congressional intent. With this ruling, the DOL is temporarily prohibited from implementing or enforcing the Final Overtime Rule. This preserves the status quo (and prior salary threshold of $23,600) until the judge either makes a final decision on the Rule’s validity or a higher court overrules this district court determination. This preliminary injunction at least delays the implementation of the Rule which was to take effect of December 1, 2016. The DOL promised to respond to the ruling with swift legal action while the states and business groups seek to “void” the Rule altogether. But, for now, the DOL is prohibited from implementing or enforcing the new overtime rule until the judge is able to make a final decision on the validity of the Final Rule. All employers need to stay tuned in for any future dates for implementation and enforcement.