Professional balancing payrollAn update on Department of Labor’s (DOL)’s controversial new overtime regulations regarding “white-collar” exemptions.

With the U.S. DOL’s regulations increasing the minimum salary for white collar exemptions scheduled to take effect next week (December 1), a federal court in Texas today issued a nationwide injunction stopping (for now) the Fair Labor Standards Act (FLSA) salary increases. Recall that a number of states filed a case against the DOL challenging the new salary thresholds. Today the court ruled that in the FLSA, Congress established only a duties test and did not authorize the DOL to establish a salary level test for exemption. Accordingly, the court found that the DOL exceeded its regulatory authority in issuing the regulations requiring the salary increases and automatic adjustments every few years. The Texas federal court found that a nationwide injunction of the DOL’s salary increases is appropriate. The DOL will likely appeal the ruling to the Fifth Circuit Court of Appeals, but for now, a federal court has enjoined the increase in minimum salary to $913 per week effective immediately.

What does this mean for employers?

Everyone has spent a lot of time planning for the December 1 deadline—deciding whether to increase an exempt employee’s salary to the $913 weekly minimum or changing that employee to a nonexempt hourly status. The fact is no one knows whether the Fifth Circuit will agree with the district court’s injunction or whether this will ultimately be decided by the US Supreme Court down the road. What can you do now?

  • If you want to proceed with your plan, you can. Nothing in the injunction prevents you from moving forward and changing some employees—raising some salaries or converting them to hourly nonexempt status.
  • If you want to hold off on increasing an exempt employee’s salary but keeping him or her in an exempt status, you can. Right now, the injunction leaves in place the old salary basis test. If the injunction is lifted, you may have to implement some changes quickly—so you will need to pay attention to the legal news.
  • If you want to change some of your formerly exempt folks to nonexempt hourly status, you can. Paying someone on an hourly basis is always okay as long as you pay the overtime.

We definitely live in interesting times. Stay tuned as we keep you updated…