Nov 23, 2016

Yes, Virginia, There is a Santa Claus!

US Dept. of Labor

On September 20, 2016, the Plano Chamber of Commerce and more than 55 Texas and national business groups (“Business Plaintiffs”) filed a Complaint in the United States District Court for the Eastern District of Texas, Sherman Division, against the U.S. Department of Labor (“DOL”), Secretary of Labor Perez, and other defendants to challenge the Final Rule promulgated by the DOL entitled “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees” (the “Rule”).  The Plaintiffs argued that the Rule “exceed[ed] the authority of the DOL” and was “arbitrary, capricious, contrary to procedures required by law, and otherwise contrary to law.”  On the same day, Nevada and several other states (“State Plaintiffs”) filed a similar Complaint.  Ultimately, the two cases were consolidated into one case.  On October 12, 2016, an Emergency Motion for Preliminary Injunction was filed by the State Plaintiffs to temporarily stop the Rule from going into effect.

As indicated in several SGR Client Alerts, the Rule that would be going into effect on December 1, 2016 changed the pay threshold salary for exempt employees from $455 per week ($23,660 annually) to $913 per week ($47,476 annually).  The Rule also was to increase the highly compensated employee exemption annual salary threshold from $100,000 annually to $134,004.

Late on Tuesday, November 22nd, the Court granted the Plaintiffs’ motion for a temporary injunction “on a nationwide basis” to enjoin the Defendants “from implementing and enforcing the following regulations as amended by 81 Fed. Reg. 32,391; 29 C.F.R. §§541.100, 541.200, 541.204, 541.300, 541.600, 541.602, 541.604, 541.605, and 541.607 pending further order of this Court.”  The Court held that the DOL’s “salary level under the Final Rule and the automatic updating mechanism are without statutory authority.”

Bottom line:  The new rules – and increased salary threshold necessary for an employee to be considered exempt – are now enjoined and put on hold.  So for now, existing standards for determining who is, and who is not, exempt will remain in effect.  More to come…

If you have any questions about these issues, please contact your Labor and Employment counsel at Smith, Gambrell & Russell, LLP.

This client alert is intended to inform clients and other interested parties about legal matters of current interest and is not intended as legal advice. 

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