Texas Court Blocks New Overtime Rules, Appeal to Follow

On November 22, 2016, a federal judge in Texas granted a nationwide preliminary injunction blocking the U.S. Department of Labor’s (DOL’s) overtime rule scheduled to take effect December 1, 2016. The rule more than doubles the required salary level to qualify for the Fair Labor Standards Act (FLSA) “white collar” exemptions, increasing the annual salary threshold from $23,660 to $47,476.  The injunction issued just days before the new federal overtime rule’s implementation date.

The ultimate fate of the regulation is now uncertain. On December 1, 2016, the DOL filed a Notice to Appeal the Court’s decision on the preliminary injunction and then a day later asked the Fifth Circuit Court of Appeal to expedite the proceedings, saying delaying the implementation date denied added pay to millions of workers. Adding further intrigue is the presumption that the incoming Trump Administration will seek to roll back the regulation if it survives the Texas litigation. Needless to say, employers need to be ready of for rapid changes.  

Next Steps for Employers

Employers who have already reclassified employees or otherwise made changes to employees’ wages or basis of pay to prepare for the December 1^st effective date should not disrupt these changes.  However, employers who have yet to reclassify their workers can delay the implementation of any changes that would have been necessary to comply with the new rule.  Importantly, a successful appeal of this recent decision could put the regulation back on the fast track to implementation.  While the status of the regulation remains in flux, employers must monitor the situation closely.

New York employers are reminded that although the federal regulations are on hold, significant increases to the exempt salary threshold for executive and administrative employees in New York State will take effect on December 31, 2016 (as well as scheduled minimum wage increases). Currently, New York’s salary threshold for executive and administrative employees is set at $675 per week.  As of December 31^st the changes to New York’s salary threshold are as follows:

Large employers in New York City (11 or more employees)

• $825.00 per week on and after 12/31/16
• $975.00 per week on and after 12/31/17
• $1,125.00 per week on and after 12/31/18

Small employers in New York City (10 or fewer employees)

• $787.50 per week on and after 12/31/16
• $900.00 per week on and after 12/31/17
• $1,012.50 per week on and after 12/31/18
• $1,125.00 per week on and after 12/31/19

Employers in Nassau, Suffolk, and Westchester Counties

• $750.00 per week on and after 12/31/16
• $825.00 per week on and after 12/31/17
• $900.00 per week on and after 12/31/18
• $975.00 per week on and after 12/31/19
• $1,050.00 per week on and after 12/31/20
• $1,125.00 per week on and after 12/31/21

Employers Outside of NYC, Nassau, Suffolk, and Westchester Counties

• $727.50 per week on and after 12/31/16
• $780.00 per week on and after 12/31/17
• $832.00 per week on and after 12/31/18
• $885.00 per week on and after 12/31/19
• $937.50 per week on and after 12/31/20

The status of the regulation will remain in question until the Texas litigation reaches a decision on the merits and final appeal. In addition, state law changes and the incoming Trump Administration will keep employers guessing in the coming months and years.  Employers everywhere should continue to closely monitor this situation.