At least once a week we get a call from a client inquiring about the status of the new salary threshold overtime regulations. We have an update, and the news is good for employers!
By way of background, on May 23, 2016, the U.S. Department of Labor (DOL) announced its final rule (Rule) to increase the threshold salary requirements for exemptions from overtime entitlement under the Fair Labor Standards Act (FLSA). We previously discussed the DOL’s Rule here. In short, the Rule more than doubled the salary threshold (from $455 per week to $913 per week) for professional, administrative and executive employees to qualify as exempt from the FLSA’s overtime requirements, and it increased the salary requirement for exempt highly compensated individuals from $100,000 to $122,148, thereby entitling millions of additional employees to overtime pay under the FLSA at a significant cost to employers, particularly small businesses and not-for-profit organizations.
The Rule was enjoined on Nov. 22, 2016, just days before it was scheduled to go into effect on Dec. 1, 2016. Two groups of plaintiffs – one composed of 55+ businesses and the other composed of 21 states – challenged the Rule on various grounds, including that the drastic increase in salary requirements effectively overtook the rest of the statute and wrongly required the reclassification of certain employees who were performing bona fide executive, administrative and/or professional duties and thus were rightfully categorized as exempt from overtime. Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas granted the injunction. Continue Reading