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Federal Court Puts DOL Salary Changes on Ice
11/23/2016

Late yesterday afternoon, a federal judge in Texas issued an order preliminarily enjoining the DOL's proposed amendments to the white-collar exemptions under the FLSA.  The most notable aspect of these proposed changes was the substantial increase in the minimum salary necessary for exempt status, from the current $23,660 to $47,476 per year. 

This decision arose from two recently filed cases brought against the Department of Labor by a group of state Attorneys General and a coalition of business advocacy groups.  Although the court did not issue a final decision on the merits of the issues, it determined that it was substantially likely that the plaintiffs would prevail on their argument that the DOL lacked the authority to impose a salary requirement that could be determinative of exempt status, regardless of an employee's job duties or responsibilities.

The injunction does not end the litigation in those cases, but it effectively places the regulatory amendments on indefinite hold until those cases conclude through final decisions.  While it's possible that the court could ultimately decide to lift the injunction, or the district court's decision could be reversed on appeal, neither of those decision points is likely to occur in the near term, or before the Trump Administration takes over the DOL.  How and to what extent the Trump DOL decides to continue to fight for these amendments remains to be seen. 

For now, employers should continue to follow the current requirements for exempt status, which are paying a salary of at least $455 per week per the current salary basis requirements, and satisfying the duties requirements appropriate to the employee's position.  To the extent employers have announced, but not yet implemented, classification changes, those proposed changes may be rescinded with advance notice to the employees.

If classification or wage changes have already occurred, employers have the option of reversing the change with advance notice to the employee.  In that case, any reclassification back to exempt status should occur prospectively and in conjunction with the start of a new workweek.  In addition, if you have employees whose employment is governed by an employment contract, be sure that you follow the procedures in the contract regarding changes.

Alternatively, the employer may decide to keep the employee in the reclassified non-exempt status.  In this regard it's important to recognize that employees do not have the right to be treated as exempt.  The default classification is non-exempt, and the decision to treat an employee as exempt ultimately rests solely with the employer, provided it can establish the necessary salary and job duties requirements.

For further information click here to see the issue alert I published on this issue.

 


Authors
Don Berner Image
Don Berner, the Labor Law, OSHA, & Immigration Law Guy
Boyd Byers Image
Boyd Byers, the General Employment Law Guy
Jason Lacey Image
Jason Lacey, the Employee Benefits Guy
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