New Overtime Rules Not in Effect … Yet


The US Department of Labor’s (DOL) new regulations regarding overtime exemptions for executive, administrative, and professional employees (known as the “white-collar exemptions") were scheduled to take effect on December 1, 2016.  The regulations would have significantly increased the minimum salary threshold for employees to qualify for white collar exemptions.  Currently, salaried employees who make $455/week ($23,660 per year) or more, are exempt from overtime pay if they satisfy the duties test for one or more of the white collar exemptions.  The new DOL regulations, if permitted to take effect, will increase this salary threshold to $913/week, or $47,476/year.

On November 22, 2016, a federal district court in Texas issued a nationwide preliminary injunction which temporarily stops the DOL from implementing or enforcing most of the new overtime rule. What this means to you, the employer, is that you can continue to pay your exempt executive, administrative, and professional employees just as you have been, assuming they are properly classified as exempt under the current salary threshold and the duties test, until further court order.

DOL appealed the preliminary injunction to the Fifth Circuit Court of Appeals, which established an expedited briefing schedule that has spanned the inauguration and change in administration. In late January, sixty business groups and four states filed briefs in support of the injunction. It is unclear whether the new administration will continue to litigate the matter.

The Texas court’s decision temporarily blocks implementation of the proposed regulation, except for the provision increasing the minimum salary threshold for the Highly Compensated Employee (HCE) exemption. That increase, from $100,000 to $134,004, appears to have taken effect December 1, as planned, by virtue of its exclusion from the judge’s list of blocked regulations. While some suspect this may be a scrivener’s error and the court intended to block this provision along with the others, if you are relying on the HCE exemption, the most conservative approach would be to assume the salary threshold has increased, or consider whether one of the other white collar exemptions applies.

 

What does this mean to employers? 

  1. Ensure your executive, administrative and professional employees are properly classified as exempt under the current salary threshold and duties tests.
  2. If properly classified as exempt under current rules, continue paying those workers just as you did prior to the proposed change to the DOL regulation.

JDSA will continue to monitor this issue in the courts, and update the blog with new developments.