The twists and turns never end.
Many of you have called over the past weeks asking whether the DOL salary level rules would go into effect after the elections. There have also been rumors of some efforts to stop the rule. Before today, salary levels were expected to increase on December 1, 2016–THAT IS NO LONGER THE CASE.
On November 22, 2016, a federal judge in Texas issued a preliminary injunction against the much-anticipated DOL rule increasing the salary level for exempt employees.
Generally, federal labor law (FLSA) requires employees who work more than 40 hours a week to be paid overtime at a rate which is 1.5 times their regular rate of pay. The FLSA allows various exceptions to this rule, including an exception for qualified executive, administrative and professional employees. For employees to qualify for this exception, they have to meet certain duties tests, must be paid on a salary basis, and must be paid a minimum weekly salary.
Since 2004, the minimum weekly salary has been $455.00 per week. The Department of Labor issued regulations on May 23, 2016, which raised that minimum salary requirement to $913.00 per week, effective December 1, 2016. These new regulations would have established the new salary level based upon the 40th percentile of weekly earnings of full-time, salaried workers in the lowest wage region of the country, which is currently the south. The final rule would have also established an automatic updating mechanism to adjust that minimum salary level every three years.
The Court, citing the Department of Labor’s own estimates, noted that 4.2 million workers who are currently classified as exempt from overtime, but who otherwise meet the duties test as an executive, administrative or professional employee, will automatically become eligible for overtime when the rule takes effect. The Court indicating “Congress did not intend salary to categorically exclude an employee with [executive, administrative of professional] duties from the exemption,” issued an injunction blocking the new regulations from taking effect.
What does this mean for employers? WE ARE BACK TO THE “OLD LAW.”
1. There is no need to increase the salary level for exempt employees as of December 1.
2. You can (it is a decision to make) go back to the way things were.
3. Consider how to communicate this (amazing) turn of events to your employees.
4. Consider which, if any, changes you have made in anticipation of the December 1 effective date are worth keeping.
A link to the court’s opinion is here: http://posting.arktimes.com/media/pdf/mazzant.pdf
Call on any of your friends at WR to discuss this change.
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Labor and Employment Group