On Tuesday, November 22nd, the United States District Court for the Eastern District of Texas issued an order granting a motion for preliminary injunction brought by 21 states and numerous business associations to stop the implementation of the new FLSA salary level test for exempt employees.
In order for an employee to be considered “exempt” from minimum wage and overtime requirements under the FLSA, the employer must determine that the employee’s position meets a three part test. First, the position must earn a salary. Second, the employee must meet the minimum salary level test for each week worked for the employer. And third, the employee’s “primary” duties must be the performance of exempt work as described in the regulations.
The new salary level test, which was set to take effect on December 1 and was the only proposed change to the exemption test, would have raised the minimum weekly salary level for exempt employees from $455 per week to $913 per week, adjusted every third year thereafter pursuant to a formula outlined in the regulations.
The Court’s ruling blocks the Department of Labor’s ability to implement the new salary level test by December 1 as planned. While the ruling reaches a preliminary conclusion the Department exceeded its authority in setting the new salary level, the court will issue a final and definitive ruling at a later date at which point the preliminary injunction may be made permanent. The Department has indicated it is exploring its options for challenging the injunction, which could include an immediate appeal to the United States Court of Appeals for the Firth Circuit or, ultimately, the U.S. Supreme Court. If the Department appeals, it faces an uphill battle to have the injunction dissolved prior to December 1.
What this means to you?
Most colleges and universities have been planning for this change for months by analyzing salaries and job responsibilities. But, in light of this ruling, there is no present legal obligation to comply with the new rule by December 1, 2016. However, because there is still a chance that the injunction could be dissolved prior to December 1 by the Fifth Circuit or the Supreme Court, institutions should stay tuned to our blog and other news sources for updates. In the event the injunction is not dissolved this calendar year, it is possible the new administration may abandon defense of the regulation and/or seek to promulgate a different regulation in its stead.