The Department of Labor’s (DOL) revised overtime regulations under the Fair Labor Standards Act (FLSA) were scheduled to become effective on December 1, 2016. The new regulations increase the minimum salary level for exempt white collar employees from $23,660 per year to $47,476.00 per year. The regulations also establish a mechanism by which the minimum salary level would be automatically adjusted every three years.
Earlier this year, several groups brought actions against the DOL to thwart, or at least delay, enactment of the overtime regulations. Twenty-one states and a consortium of business groups filed lawsuits against the DOL in the United States District Court for the Eastern District of Texas seeking to have the final regulations set aside. The lawsuits claim that the revised regulations violate the FLSA inasmuch as the FLSA does not set forth a minimum salary threshold, but merely reference certain duties of exempt employees. The lawsuits also contend that the provision of the regulations automatically readjusting the salary threshold every three years violates the Administration Procedures Act.
In a somewhat surprising decision, on November 22, 2016, Judge Amos Mazzant granted the states’ motion for preliminary injunction and enjoined enforcement of the revised regulations nationwide. Judge Mazzant based his decision on the relevant language of the FLSA. Section 213(a)(1) of the FLSA exempts from its overtime requirements “any employee employed in a bona fide executive, administrative, or professional capacity . . . as such terms are defined and delimited from time to time by regulations of the Secretary.” Judge Mazzant wrote that Section 213(a)(1) refers to a worker’s function or duties only, and thus the regulations’ focus on salary is contrary to the intent of Congress. This means that for the time-being, until the judge has an opportunity to fully consider the arguments raised in the lawsuits, the revised regulations will not go into effect on December 1st and that the existing minimum salary level remains in place. While Judge Mazzant’s preliminary decision does not end the matter, inasmuch as the judge made a determination that the regulations likely violate the law, the DOL likely faces a difficult battle in Judge Mazzant’s court.
Employers who have not enacted changes in anticipation of the revised regulations need not do so. Employers who have already done so must decide whether to roll back the clock and reverse course or leave their changes in place pending an ultimate resolution to this issue. It is unknown what the courts will do, and unknown what position the incoming administration will take on the matter. We will keep you apprised as circumstances warrant.