Yesterday, a federal judge in Texas issued a preliminary injunction halting the Department of Labor’s new overtime regulations. Those regulations changed the threshold for salary exemption under the Fair Labor Standards Act from $23,000 per year to $47,476 per year. Importantly, this is not a final decision. Instead, it is a preliminary ruling and there is still some chance that the judge could later uphold the new regulations. Nevertheless, employers have received a reprieve from the December 1, 2016 deadline for compliance.
Generally, FLSA regulations exempt an employee from receiving overtime if he or she: (1) performs executive, administrative or professional duties; (2) is paid on a salary basis; and (3) meets a minimum salary level. The DOL cannot create an exemption that is based on salary alone. Instead, the employee must also perform executive, administrative or professional duties. The judge enjoined the new overtime regulations because he found that the new $47,476 salary level essentially created a de facto salary-only test.
Right now, under the old regulations, approximately 4.2 million employees are exempt from overtime because they perform executive, administrative or professional duties and their salary is greater than $23,000 per year. Under the new regulations, those employees will automatically become eligible for overtime even though their duties will not change. The judge halted the overtime regulations because Congress did not intend salary to categorically exclude employees with executive, administrative or professional duties from the exemption.