November 23, 2016

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By Camden Navarro Massingill

On November 22, 2016, a Texas federal judge issued a nationwide preliminary injunction temporarily blocking the Department of Labor’s regulation extending mandatory overtime protections to white collar employees.  The revised white collar overtime regulations were set to go into effect on December 1, 2016.

Under the new regulations, the standard salary level for the exemption from overtime requirements was increased from $455 per week ($23,660 a year) to $913 per week ($47,476 a year).  Thus, employees earning less than $47,476 per year – even if they were salaried – would be entitled to overtime pay as a matter of law.  On Tuesday, U.S. District Judge Amos Mazzant, ruling upon a consolidated set of cases, agreed with 21 states and a coalition of business groups that the new overtime rule is unlawful and granted their motion for a nationwide injunction.

While the revised rule is currently stymied, meaning the injunction blocks the regulations from going into effect on December 1, the injunction is only preliminary.  It is not permanent.  The Department of Labor can appeal Judge Mazzant’s decision to the Fifth U.S. Circuit Court of Appeals, which could act on an expedited basis.  In short, the law is in flux right now.

To the extent possible, employers who have not yet made changes to bring their business into compliance with the revised regulations should hold off on reclassifying employees who currently are paid less than $913 per week ($47,476 per year) or raising employees’ salaries to meet the revised exemption thresholds.  However, because of the temporary nature of the injection, such employers should continue to develop a plan for compliance with the revised regulations, if the regulations do become effective.  Employers who have already commenced bringing their business into compliance with the revised regulations will need to make a business decision whether to halt those changes or reverse any changes while the nation awaits any ensuing legal developments.  (Remember that it does not violate the law to pay someone more than the threshold salary amount provided in the DOL rule.)

For those South Carolina employers who have already given employees written notice of expected changes or who have already begun implementing changes, additional written notice would have to be circulated to all employees affected by business decisions made in light of this injunction.

We will continue to keep you abreast of this fast-moving situation.  If you need any assistance rolling back changes or circulating additional written notice, the attorneys at Wyche are available to assist.

Happy Thanksgiving!