Client Alert: Court Blocks New FLSA
On November 22, 2016, an Eastern District of Texas federal court issued a nationwide injunction delaying enforcement of the U.S. Department of Labor's (DOL) changes to the Fair Labor Standards Act (FLSA) regulations redefining the salary requirements for the Executive, Administrative, and Professional (“EAP”) exemptions. The overtime rule would have raised the salary threshold to qualify for exempt status under the “white collar” tests from $23,660 to $47,476 per year. This decision stops the new regulation from going into effect on December 1, 2016. The court did not address the prospective change in the salary requirement for the “highly-compensated” exemption from $100,000 to $134,004 per year, and the status of that proposed change is unclear.
As background, twenty one states filed an emergency motion for a preliminary injunction against the DOL to halt the implementation of the revised regulations. The District Court held on multiple bases that the DOL’s new overtime regulation is invalid. The court reasoned that the DOL rule exceeded the agency’s authority by raising the minimum salary level to an extent that it “supplants the duties test.” In addition, the Court found that the DOL lacked the authority to require automatic updates to the salary threshold test, as the rule provided. As a result, the court enjoined the regulations from becoming effective on December 1, 2016.
We anticipate that this matter will continue to be litigated, and/or be subject to future federal legislation. Thus, it remains to be seen whether this decision will be upheld. For now, employers can continue to follow the old salary threshold of $455 per week or $23,660 per year for exempt employees. Even so, employers should be cognizant that any employee who is classified as exempt from overtime still must meet the “duties test” for one of the EAP exemptions to be properly classified as exempt.
For more information, please contact:
Marquetta Bryan, 404.322.6327, firstname.lastname@example.org
Michelle Johnson, 404.322.6167, email@example.com
Jenny Case, 404.322.6465, firstname.lastname@example.org
Mark Keenan, 404.322.6111, email@example.com
Bill Foster, 864.250.2222, firstname.lastname@example.org
Susan Warner, 904.665.3654, email@example.com
Debbie Durban, 803.255.9465, firstname.lastname@example.org
Sue Harper, 803.255.5544, email@example.com
The articles published in this newsletter are intended only to provide general information on the subjects covered. The contents should not be construed as legal advice or a legal opinion. Readers should consult with legal counsel to obtain specific legal advice based on particular situations.