The DOL’s change to the overtime exemption limit (called the “Final Rule”) has been put on hold by U.S. District Judge Amos L. Mazzant in the Eastern District of Texas. The injunction applies to all U.S. businesses, many of whom have already adjusted salary levels to meet the new requirement.

The ruling postpones the enforcement of the raise in the exemption limit until the federal government can prevail in a countermanding order from an appeals court. However, with the Trump Administration taking the reins in Washington, this may not happen. The FLSA salary threshold of $455 a week was set to be extended to $921 a week or $47,892 a year, effective on December 1, 2016.

Background
The 1938 Fair Labor Standards Act was a far-reaching statute that not only standardized the 40-hour work week, but also set provisions regarding child labor, minimum wage, and overtime compensation.

FLSA requires that salaried personnel who work more than 40 hours per week are given additional compensation. There was an exception to this rule, however. The FSLA designated a class of EAP (executive, administrative, and professional) employees who would be exempt from the overtime pay provisions if their salary was above a certain level. Hence, the term “white collar” exemption.

Judge Mazzant ruled that the 50 organizations from 21 states who had sued the federal government stood a significant likelihood of prevailing in their case. Furthermore, Judge Mazzant ruled that the plaintiffs would suffer serious financial harm if the changes became effective.

Since the proposed FLSA overtime exemption increase did not take effect on December 1, 2016, employers may continue to follow the current overtime standards. If you have more questions about how this affects your business, call Advantage Payroll Services at (800) 440-9033.

 

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