On Nov. 22, 2016, the U.S. District Court for the Eastern District of Texas granted a preliminary injunction stopping the enforcement of the Department of Labor’s ("DOL") new wage and hour rule. Nevada v. United States DOL, Civil Action No. 4:16-CV-00731 (E.D. Tex. Nov. 22, 2016). The DOL rule was set to go into effect on Dec. 1, 2016.
The Fair Labor Standards Act ("FLSA") entitles non-exempt employees to payment at a rate of 1.5 times the employee’s regular rate of pay for time worked in excess of 40 hours per week. The DOL rule in question would alter the requirements for exempt status.
Under the current rule, in addition to the work duty requirements, an exempt employee must earn a salary of at least $455 per week ($23,660 annually). The new rule would increase the salary requirements to $913 per week ($47,476). As a result of the increased wage requirements, formerly exempt employees would become non-exempt employees entitled to overtime payments.
The DOL under the Obama Administration filed a notice of appeal with the 5th Circuit on Dec. 1, 2016. Briefing is presently scheduled to close May 1, 2017. Oral argument has not been scheduled.
It remains unclear how the DOL under the Trump Administration will proceed. It may choose to:
- Pursue the appeal as initiated in December 2016;
- Withdraw the DOL rule; or
- Propose a new rule for comment.
With the enforcement of the DOL rule in flux, some employers have chosen to alter their payment practices to accommodate the DOL rule, while others have opted to “wait and see,” pending the outcome of the DOL’s appeal. Many have also taken the opportunity to review their positions against the duties tests.