Texas Court Enjoins Enforcement of DOL Rule Increasing Salary Minimum for Exempt Employees

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In a prior post, I described the Final Rule issued by the U.S. Department of Labor on May 18, 2016, effective December 1, 2016, increasing the minimum salary requirement for Executive, Administrative and Professional employees to qualify as exempt employees to $913 per week or $47,476 per year.  Yesterday, nine days before it was to take effect, the U.S. District Court for the Eastern District of Texas, in the case of State of Nevada v. U.S. Dept. of Labor, issued a preliminary injunction prohibiting the Department of Labor from enforcing this rule.  News reports state that the DOL is considering its options.  The injunction has national effect; it is not limited to the states that filed the lawsuit.

To the extent that employers have not yet implemented policies in response to the Final Rule, they can suspend work on the new policies.  If an employer has already implemented new policies to comply with the Final Rule, they should be cautious in rolling back the new policies to make sure that they remain in compliance with current FLSA and state laws and regulations regarding exempt employees.  The Court’s ruling is a preliminary injunction; the Court has stated that it will consider a permanent injunction, but has not yet done so.

The Texas Court’s ruling was based upon the conclusion (1) that the DOL’s Final Rule supplanted the duties test for determining an employee’s exempt status, as established in the Fair Labor Standards Act, with a salary-level test, and (2) that the FLSA does not grant the DOL authority to use a salary-level test to determine whether an employee is exempt from overtime and other wage and hour laws.

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