The DOL’s Overtime Salary Regulations are Enjoined

Last week, a Texas federal court issued a preliminary injunction delaying the U.S. Department of Labor’s (DOL) latest rule for overtime exemptions from taking effect. The injunction comes as the result of a lawsuit filed by 21 states and several business organizations that claimed that the DOL exceeded its authority by more than doubling the current salary threshold for the “white collar” exemption to overtime pay under the Fair Labor Standards Act (FLSA).

Under the current federal regulations, executives and supervisors, administrative employees and professionals are exempt from overtime compensation if they meet two requirements of the white collar exemption. First, the employee must be paid a minimum salary of $455.00 per week, or $26,660.00 per year. Second, they must perform “exempt duties” as defined by the DOL. The new rule, which was scheduled for implementation on December 1, 2016, raises the salary threshold considerably, requiring that white collar employees receive a minimum salary of $913.00 per week or $47,476.00 per year.  At this time, the increase in the salary minimum for exempt status will not take effect, and the injunction is likely to remain in effect throughout the remainder of the Obama Administration.

While many business owners across the country can relax about the difficult and expensive implementation issues the new regulations would have required, it is important that New York employers recognize that state regulatory changes requiring increases to the overtime exemption’s salary requirement  will take effect on December 31, 2016. Specifically, at the end of this year, the salary requirement for small employers in  New York City will increase to $787.50 per week and to $825.00 for large employers. The salary threshold for employers in Nassau, Suffolk and Westchester Counties will increase to $750.00 and to $725.50 for all employers in the rest of the State. Perhaps even more significant, the state minimum salary level, like the minimum wage, will increase each year as set forth in the following table.

With this regulation going into effect next year, New York employers will be required to review the salary status of all exempt employees to ensure the workers are paid more than the salary minimum and perform exempt duties.  New York employers are also going to be required to monitor the minimum salary requirement over the next few years as the regulations increase the minimum salary threshold to $1125.00 per week ($58,500.00 per year) for New York City and the downstate counties within a few years.