My last post provided a simplified explanation of the Fair Labor Standards Act’s (FLSA) revised regulations which were set to take effect on December 1, 2016. Well, what a difference a couple of weeks make. On November 22, 2016, a Federal Judge in Texas ruled in favor of twenty-one states, the US Chamber of Commerce and other groups’ which challenged the US Department of Labor’s authority to make such a sweeping change, which included automatic upward adjustments to the salary threshold every three (3) years.
Although many employers, especially small businesses, are celebrating this temporary injunction, it is important to remember that it is temporary. There is no guarantee that it will become permanent, but for now at least they can hold off on transitioning employees whose salaries are within the $23,660 current threshold to $47, 476 proposed threshold to non-exempt.
Judge Amos Mazzant, of U.S. District Court for the Eastern District of Texas issued the injunction blocking the new rules. An article on the Society for Human Resource Management’s website, www.shrm.org, quoted Judge Mazzant as stating that the US Department of Labor “has admitted that it cannot create an evaluation ‘based on salary alone.’ ” However, “this significant increase to the salary level creates essentially a de facto salary-only test. If Congress intended the salary requirement to supplant the duties test, then Congress—and not the department—should make that change.”
So what does this mean for the potentially affected employees, their employers, and HR professionals like myself? The SHRM article recommends that employers who have already either raised employees’ salaries to meet the proposed new salary threshold, or reclassified formerly exempt employees to non-exempt as required by the proposed new threshold, not reverse those changes. The article also suggests that employers who were waiting until December 1, 2016 to implement the changes hold off until a final ruling regarding the litigation is made.
For more information on this subject, visit https://www.shrm.org/ResourcesAndTools/legal-and-compliance/employment-law/Pages/judge-blocks-flsa-overtime-rule.aspx.
