Just days before the new overtime rules were set to take effect on December 1, a federal judge in Texas has issued an injunction that will stop the new rules from becoming effective. The new rules were to significantly increase the salary threshold applicable to certain exemptions from overtime pay requirements — from $23,600 per year to $47,476 per year.
Judge Amont Mazzant III of the Eastern District of Texas ruled yesterday that the Department of Labor lacked the authority to make the change. The judge reasoned that such a high salary threshold would mean that the salary aspect of exemption tests would effectively supplant the duties test. The judge said that the original intent of including a salary threshold in the exemption tests was merely to “screen out” obviously nonexempt workers so that a duties test would not be necessary in their case. An increase of the salary requirement to $47,476 per year would create, he said, “essentially a de facto salary-only test,” making the duties of the employees in question irrelevant to their status as exempt or non-exempt.
Although yesterday’s ruling was only a preliminary injunction, pundits have predicted that the new salary threshold is unlikely to be revived, given the conservative bent of the Fifth Circuit Court of Appeals (which would hear any appeal of Judge Mazzant’s ruling) and the fact the Department of Labor under the upcoming Trump administration may be less likely to fight for the would-be rule. Employers, stay tuned!
Those with questions about the Texas court’s decision and what it means for their business should contact Portnoy Messinger & Pearl. In particular, employers who have already taken steps to implement the new rules – especially those who have announced salary raises or other changes to their staff – may need guidance in determining next steps.
Portnoy, Messinger, Pearl & Associates, Inc. is here to answer any questions you have regarding the Texas court’s decision. Please keep in mind that in addition to our staff of seasoned HR professionals, we also have a staff of experienced employment lawyers on hand to address any questions you may have regarding compliance. Contact us at 800-921-2195 or 516-921-3400. You can also visit our website http://www.pmphr.com/ or e-mail us at info@pmpHR.com.