Yesterday evening, the Honorable Amos L. Mazzant of the U.S. District Court for the Eastern District of Texas issued a preliminary injunction barring the Obama Administration’s implementation of new regulations regarding overtime eligibility for certain workers making less than $47,476 per year. Under the regulations promulgated by the United States Department of Labor in late May, the minimum salary level for executive, administrative, and professional employees to be treated as exempt from the Fair Labor Standards Act’s overtime requirements was to be increased from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). These regulations were slated to take effect December 1, 2016.
Judge Mazzant’s ruling – which, by its terms, applies nationwide to all employers – is subject to appeal and the Department of Labor released a statement last night that the agency is reviewing its legal options. Regardless, both President-Elect Donald Trump and leadership for the incoming Republican-controlled Congress have previously signaled an intent to modify, or to completely scrap, the new overtime regulations in the coming legislative session.
As a practical matter, Judge Mazzant’s ruling leaves employers who have prepared, or were preparing, to comply with the new overtime rules in a bit of a lurch. In short, employers are best served to maintain the status quo until we have more regulatory certainty. We advise employers that have already re-classified affected employees as non-exempt, or bumped compensation to comply with the increased salary threshold, not to revert to prior practices (at least until legal wrangling over the new overtime regulations comes to a more final resolution). At the same time, we advise employers who have not yet implemented changes complying with the new rules to delay implementation pending the outcome of legal process.
FLSA exemption determinations are often fact-intensive, frequently carry practical implications for workplace dynamics, and are regularly the subject of litigation. Accordingly, we recommend that you consult with legal counsel on any significant change to your business’s or organization’s approach to wage and hour matters.
Walter | Haverfield will issue additional guidance as this story further develops. For more information on this or other employment law issues, please contact one of our Employment lawyers.
George J. Asimou is an associate in the Labor and Employment Services Group of the Cleveland-based law firm of Walter | Haverfield LLP.