Last Spring, the Department of Labor’s Final Rule Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees issued with a December 1, 2016 effective date. At its core, the Final Rule requires that employees must be paid a weekly salary of at least $913 (annually, $47, 476) to maintain “white collar” exemption from overtime and other federal Fair Labor Standards Act requirements, as long as the employees’ duties satisfy the exemption rules too. We wrote about this previously.
Last month, twenty-one states, led by Nevada and Texas, filed an emergency motion to enjoin implementation of the Final Rule in a federal court action commenced the month before. State of Nevada, et al. v. DOL (USDC, Eastern District of Texas, case No., 4:16-cv-00731-ALM). At its core, the action challenges DOL authority to increase the salary threshold and set automatic increases, and whether the Final Rule infringes on state government employer’s sovereignty. This blog post does not analyze the merits of this action, but instead updates our clients and friends on its status given that we are now just a few weeks away from December 1.
The Court granted expedited consideration and briefing, and set a hearing for oral argument on the injunction motion for November 16, 2016 at 9:00 a.m.
Also pending is a motion for expedited summary judgment led by the US Chamber of Commerce. Briefing is underway on a rapid schedule. The Court’s October 31, 2016 Order states that if a hearing becomes necessary, it will be scheduled for November 28, 2016.
We’ll monitor the case and update our blog if Court Orders issue impacting the December 1, 2016 deadline.
In the meantime, employer’s should assume that the Final Rule will go into effect and be ready as of December 1 to: (1) retain exempt classification of employees by paying the new minimum salary amount (assuming their duties also satisfy the exemption requirements), (2) reclassify some or all employees as non-exempt, and pay regular and overtime hourly rates of pay and follow other FLSA requirements applicable to non-exempt employees; or (3) to have evaluated the consequences of non-compliance against the possibility that the Final Rule will be reversed during a Trump Administration.
Assuming that the Trump administration will want to reverse the Final Rule, that process will be complicated and slow due to the date this regulation became final and the regulatory process needed to accomplish reversal.