On November 22, 2016, a U.S. District Court for the Eastern District Texas temporarily enjoined the enforcement of the Department of Labor’s “Final Rule” that would have drastically increased the salary threshold for certain exempt workers. The DOL’s Rule, scheduled to become effective on December 1, 2016, doubled the minimum salary requirement for employees performing executive, professional, or administrative duties to be exempt from overtime pay (a change from $23,660 annually to $47,476 with annual automatic increases). The injunction temporarily suspends the Final Rule across the entire nation.
Several contingencies render the future of these salary changes unpredictable. First, this lawsuit and injunction will most likely remain pending beyond Inauguration Day, but the new President and his Labor Secretary may withdraw the Final Rule or propose a more modest increase in the salary threshold. Second, a proposed law, the “Regulatory Relief for Small Business, Schools and Nonprofits Act,” which delays enforcement of the Final Rule until June 1, 2017, has already passed the House and has gone to the Senate. Third, the lawsuit could continue through the trial court and end up in the U.S. Supreme Court—which may not yet have a full contingent of Justices. Another, more practical, consideration: the Final Rule prompted some employers to conduct audits. Changes in compensation, duties, and time keeping may have already been adopted that make sense to keep in place. Employers are always free to pay wages above the minimum set by any Administration. How further changes in compensation may affect employee morale and impact the financial circumstances of both the employer and employee may be the most sensitive issues for employers to consider.