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Texas Judge Rules Against DOL Rules

A federal judge in Texas has prevented the much-debated US Department of Labor salary rule from taking effect on December 1, 2016. As you likely remember, last May, the DOL announced an increase in the salary level from $23,660 to $47,476 for “white collar” workers exempt from the Fair Labor Standards Act’s overtime rules.

Because the rule will not go into effect on December 1, employers will not be required to either increase salaries for exempt workers or change currently exempt employees to hourly positions on December 1, 2016. If you have already made the changes necessary to comply with the rule, please do an analysis to determine if and how you will revert back to your original employment scheme. Keep in mind that some states require advance notice of any changes to an employee’s manner or amount of pay.

Additionally, state laws regarding salary levels remain unchanged due to this ruling. For example, if you are a California employer, you will still be responsible for complying with California’s minimum exempt salary level increase to $43,680 on January 1, 2017.

The injunction is sure to be appealed immediately by the government, but it is unlikely that an appeal and a reversal of the Texas court’s decision would be rendered by an appellate court within the few days before December 1. The injunction is a preliminary injunction, not a permanent one, so there is the possibility that the rule and its increased salary level will in fact be implemented in due course. Yet another prospect is that Congress could pass legislation to increase the salary level by smaller amount than the DOL rule’s salary level.

We will continue to monitor the appellate process and keep you informed of any more changes regarding the DOL rule. For a discussion on your specific situation, please contact us.