As you may have heard, just ten days before the new Department of Labor (“DOL”) Overtime Expansion Rule was to go into effect on December 1, 2016, a federal judge in Texas issued a preliminary injunction to prevent the exempt salary threshold from increasing from $23,660 to $47,476. The suit claimed that the DOL had exceeded its authority when it raised the salary thresholds, that the thresholds were too high, and also objected to the automatic adjustments to the threshold every year.
Originally, this case was filed in Texas. However, 21 additional states, including South Carolina, joined the suit. It was also consolidated with a similar action filed by the U.S. Chamber of Commerce and other business groups, which voiced similar objections to the provisions of the rule. The preliminary injunction will apply nationwide.
Judge Mazzant, of the U.S. District Court for the Eastern District of Texas, granted the preliminary injunction on November 22nd. He stated that the “preliminary injunction preserves the status quo while the court determines the [DOL’s] authority to make the final rule as well as the final rule’s validity.”
For now, employers may continue to follow the existing overtime regulations without raising exempt employee salaries. It is business as usual while the court takes its time reviewing the merits of the case. If the rule is struck down, you should expect it to be challenged by the DOL on appeal.
As employers, if you have already increased salaries, you should probably keep the increase in place, as taking it back would be difficult and may cause employee dissatisfaction and unrest in the work place. If you have not made changes (i.e., changing the classification of exempt employees to non-exempt), you need not make any changes now. Notwithstanding, a preliminary injunction is temporary. You should expect that this matter will be challenged in the courts. There is no guarantee of the outcome of these proceedings and employers still should be prepared to make changes as necessary in the future.
For more information or to learn about how your employees may be affected, please contact me personally at firstname.lastname@example.org
Liz Speidel is an employment lawyer in Charleston, South Carolina offering advice and counsel to employers on all aspects of the employment relationship. Recognized by The Best Lawyers in America® for Employment Law – Management since 2013, her firm is also named one of the “Best Firms in America” by the same publication.