Yesterday, September 20, 2016, officials in twenty-one States filed a lawsuit in the U.S. Court for the Eastern District of Texas, seeking to enjoin the implementation and enforcement of and declare invalid the amendments to the white collar exemptions under the Fair Labor Standards Act proposed by the U.S. Department of Labor (DOL). The new rules are set to become effective on December 1, 2016. The lawsuit alleges several improprieties by DOl in issuing the new overtime rules which double the threshold for several classifications of employees considered to be exempt from receiving overtime pay.
Last week, at the 7th Annual Underwood Employment Law Seminar, Underwood lawyers addressed the sweeping impact of these new rules. Currently, employees who perform executive, professional, or administrative duties (which are not changed by the new rules) are exempt from overtime pay if they are paid a salary of at least $455/week ($23,660 annually). The proposed rules increase the minimum salary for exempt employees to $913/ week ($47,476 annually). The proposed rule also contains an indexing provision to automatically raise this salary threshold every three years.
At this time, September 21, 2016, there is NO court injunction stopping implementation of the new overtime rule and the DOJ has NOT announced any delay or suspension of the proposed rule change. Employers delaying transition plans to meet the December 1, 2016 deadline for compliance with the new overtime rule do so at their own risk.
Underwood will monitor this case closely as the December 1, 2016 implementation date for the new rule approaches.
Marcus Norris, a shareholder with the Underwood Law Firm, and focuses his practice in Municipal and Employment Law. This article is for general and academic information only and is not intended as legal advice or as a specific position asserted on behalf of any existing or future client of the firm.