Below is a Legal Alert on a signficant FLSA issue from the Vandeventer Black Labor Law Team
LEGAL ALERT
FLSA Salary Increase Halted
A federal court has
enjoined the Fair Labor Standards Act (FLSA) salary increase. The court’s
order, entered on November 22, 2016, is a nationwide preliminary injunction. As
a result, employers do not have to comply with the new FLSA salary threshold
on December 1, 2016.
The U.S.
Department of Labor (DOL) issued a final rule on May 17, 2016, increasing the FLSA’s
salary threshold. The final rule, which was to go into effect on December 1,
2016, would have increased the salary threshold for the FLSA white collar
exemptions from $23,660 per year to $47,476 per year, and the annual
compensation threshold for the “highly compensated” exemption from $100,000 per
year to $134,004 per year. Had the new rule gone into effect, any employee paid
less than $47,476 per year would have been eligible for overtime pay. The DOL’s
final rule also provided for automatic adjustments to the salary and highly
compensated threshold every three years. Employers who have been grappling with
whether to give raises to employees paid less than $47,476, or budget for
increased overtime costs, or hire additional personnel to reduce overtime hours,
may now lay their concerns aside. The FLSA is not changing on December 1, 2016,
after all.
Twenty-one states
and over fifty business organizations filed suit to stop the DOL’s final rule.
Their suits were consolidated in the United States District Court for the
Eastern District of Texas. In its preliminary injunction, that Court ruled that
the DOL exceeded its authority by raising the salary threshold level so high that
it supplanted the “duties tests” for the FLSA white collar exemptions. The
court stated that the DOL “create[d] essentially a de facto salary-only test,”
thus subverting the importance of the FLSA exemptions’ duties tests. The Court
also found that the DOL did not have authority to create an automatic
adjustment to the salary threshold.
The injunction is
preliminary, but it signals that the Court is likely to issue a permanent
injunction later. The Court’s decision is the second recent defeat for
President Obama’s agenda: just last month, the same federal Court in Texas
issued a preliminary injunction blocking the federal contractor “blacklisting”
regulations. See Vandeventer Black’s Legal Alert on that topic
here.
For assistance reviewing your business' FLSA compliance, or other labor or employment matters, please contact us to set up a meeting with our labor and employment law team.
Anne
G. Bibeau
757-446-8517
Dean T. Buckius
757-446-8620
Arlene F. Klinedinst
757-446-8504
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