Nationwide Injunction Blocks Department of Labor Overtime Regulations from Taking Effect December 1, 2016

November 2016

Pending further legal developments, employers are not required to abide by the revised federal regulations, which raised the minimum salary requirement to $913 per week.

On November 22, 2016, a federal court in Texas issued a nationwide preliminary injunction (“Injunction”) blocking the U.S. Department of Labor (“DOL”) from implementing and enforcing its revised white collar overtime regulations which were set to take effect on December 1, 2016. The regulatory revisions would have more than doubled the minimum salary requirements for the major white collar exemptions to the Fair Labor Standards Act (“FLSA”).

The Court’s decision stems from a lawsuit filed by 21 states earlier this year, arguing that the DOL had overstepped its authority when drafting the overtime rule by focusing on employees’ compensation, instead of the work they perform.

Although the Injunction is not a final order and is subject to revision or appeal, it is a strong indication that the regulation may be stricken by the Court. The Injunction is nationwide and takes effect immediately. It suspends the DOL’s implementation and enforcement of the revised regulations until the Court can issue a ruling on the merits, and will remain in effect until further order of the Court or a Court of Appeals.

What Does This Means For You?

The Injunction preserves the status quo and prevents the revised overtime regulations from becoming effective on December 1. Pending further legal developments, employers are not required to abide by the revised regulations, which raised the minimum salary requirement to $913 per week ($47,476 annually). Employers are only required to abide by the minimum salary requirement established by the current regulations of $455 per week ($23,660 annually) until further legal developments mandate otherwise. Employers should, however, take the following into consideration:

  • Accurate Recordkeeping is Key: If the regulations are later upheld, they may be enforced retroactively, in which case employers could be liable for overtime payments to employees who were classified as exempt under the current regulations, but who are not exempt under the revised regulations. In the event of litigation attempting retroactive enforcement of the overtime rule, it will be difficult for employers to defend against claims if they do not have accurate records of the hours worked by employees. Accordingly, we recommend that employers who decide to hold off on complying with the revised regulations keep accurate records of the hours worked by any employee who is now considered exempt, but could be considered non-exempt under the revised regulations.
     
  • State White Collar Thresholds Still in Effect: For now, employers are only required to abide by the minimum salary requirement established by the current FLSA regulations of $455 per week ($23,660 annually), however employers must also consider applicable state law that may set  “white collar” salary thresholds higher than $455 per week. For example, the current salary threshold for the administrative and executive exemptions in New York is currently $675 per week ($35,100 annually).

For more information on this issue or other employment matters, please contact:

Mara B. Levin at [email protected] or +1 212 592 1458
Carol M. Goodman at [email protected] or +1 212 592 1465
Jonathan Adler at [email protected] or +1 212 592 5936

© 2016 Herrick, Feinstein LLP. This alert is provided by Herrick, Feinstein LLP to keep its clients and other interested parties informed of current legal developments that may affect or otherwise be of interest to them. The information is not intended as legal advice or legal opinion and should not be construed as such.