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11-23-2016 DOL Overtime Ruling Update

In an unusual and last-minute decision, U.S. District Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas granted an injunction yesterday to stop the Department of Labor's (DOL) Final Rule changing the salary threshold for exempt employees from going into effect on December 1, 2016. As such, the salary threshold for employees falling under the "white collar" exemptions will remain at $455.00 per week for the time being and will not change to $913.00 per week on December 1, 2016.


The Final Rule was issued by the DOL in May of 2016 to establish new regulations under the Fair Labor Standards Act (FLSA). The FLSA overtime provisions generally require that employers pay employees one and a half times their "regular rate" of pay for every hour worked in excess of 40 hours in a workweek, unless a specific overtime exemption applies. Currently, the three "white collar" exemptions (covering employees who perform certain executive, professional, or administrative duties) also require the workers be paid a salary of at least $455.00 per week, or $23,600.00 annually, to meet the requirements of the exemption. The Final Rule increased this threshold to $913.00 per week (or $47,476.00 annually), and was set to take effect on December 1, 2016. The Final Rule also established automatic increases to the threshold every three years.


While asserting that it was not making a general statement about the lawfulness of having a salary threshold for the white collar exemptions, the Court implied that having any kind of salary threshold was unlawful. The Court stated, "The plain meanings of the terms in Section 213(a)(1), as well as Supreme Court precedent, affirms the Court's conclusion that Congress intended the [white collar] exemption[s] to depend on an employee's duties rather than an employee's salary."


The injunction is a temporary halt on the implementation and enforcement of the Final Rule and does not constitute an ultimate determination that the Final Rule is unlawful. However, until further notice, employees who clearly meet the job duty requirements of a white collar exemption need only be paid a salary of $455.00 per week.

The Labor and Employment group at Fraser Stryker advises clients on a variety of federal regulatory matters. Fraser Stryker is widely recognized as a leader in employment law, and focuses on assisting businesses navigate complex employment issues. For further information or assistance with your legal issues, please contact one of Fraser Stryker's experienced labor and employment attorneys, Pat Barrett, Kate Dittrick, Sally McGill, or Rhianna Kittrell at 402-341-6000.