CLIENT ALERT: Department of Labor’s Final Rule Doubling Minimum Salary for FLSA Exemption Enjoined Nationwide

On November 22, 2016, the Eastern District of Texas temporarily enjoined the Department of Labor (DOL) final rule implementing changes to the federal overtime regulations that would have significantly increased the number of employees eligible for overtime pay under the Fair Labor Standards Act (FLSA). The changes that were set to take effect on December 1, 2016 would have doubled the minimum salary employees must earn before they could be classified as exempt under the FLSA from receiving overtime pay.

The DOL final rule would have:

  •  Increased the minimum salary requirement for the executive, administrative, and professional employee exemptions from $455 per week to $913 (or $23,660 per year to $47,476 per year). 
  • Increased the minimum annual compensation requirement for exempt highly compensated employees from $100,000 to $134,004 per year.
  • Automatically updated the minimum salary levels every three years.

The Eastern District of Texas held that the plaintiffs demonstrated a likelihood of success on the merits in challenging the DOL final rule as unlawful, determined that the DOL final rule exceeds the DOL’s delegated authority, and directly contradicts Congress’s intent in the FLSA.

Actions employers should take now:

  • The court’s ruling is preliminary and subject to appeal. The DOL final rule may still be implemented. We will provide updates on this topic as this develops.
  • If you have already announced changes to comply with the rule, undoing those changes may cause upheaval among employees, so consider leaving them in place. 
  • If you wish to postpone all changes that is acceptable. However, if you choose to reclassify certain employees who make less than $913 per week as non-exempt you can move forward with these changes. Let employees know that despite the uncertainty surrounding the DOL’s final rule, you are reclassifying them as non-exempt.

For more information regarding the temporary stay of the DOL final rule or on any other employment matter, please contact the Olshan attorney with whom you regularly work or either of the attorneys listed below.

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