A federal court in Texas has issued an order that blocks—nationwide—the U.S. Department of Labor’s (“DOL”) new regulations that would have doubled the minimum salary for many “white collar” workers on December 1, 2016. While not a final decision in the case, and it remains subject to appeal, the order means that the new regulations and salary increase will not take effect, at least for now.

Practically, the decision will have varying impacts on employers, depending on where they were in preparing for the regulations. For example, it is good news to employers who had not yet taken steps to comply with the new rule. For those employers, there is no change in the law to worry about—yet. Second, for those employers who have taken steps to comply with the new rule by planning to reclassify workers or raising salaries, but have not yet announced those changes, they can stand down for now and make no changes (although we recommend that employers who realized workers were misclassified as exempt based upon their duties irrespective of salary level should go forward with that reclassification).

But for those employers who have already announced changes to employees to be prepared for the new rule, by either reclassifying workers or changing or raising pay, a quite difficult situation may be presented. In that case, employers may be presented with the choice to ignore the order and go forward with the pay changes, despite not being required to, in order to avoid impacting employee morale, or to reverse course and explain to employees that the changes or salary increases will not happen after all (or at least for now).
We strongly advise businesses to stay informed about this case and up-to-date about any appeals and final decision. If you have questions about this significant development, please contact the Womble Carlyle attorney with whom you regularly work, or any member of our Labor and Employment team.