On November 22, 2016, U.S. District Judge Amos Mazzant from the Eastern Texas district issued an injunction to disallow the application of the Department of Labor’s March 23, 2016 “Final Rule” ruling on overtime requirements for salaried workers.
The Final Rule would have raised the minimum salary level to qualify for exempt employee status (EAP) to $913 per week ($47,476 annually), effectively requiring employers to pay overtime to many salaried workers.
The Court found the Department of Labor alone does not have the constitutional right to utilize a salary-level test in determining eligibility for the exempt employee (EAP) status. Further, it found that the Department of Labor does not have authority to implement an automatic increase mechanism. The injunction is applicable nationwide and effectively blocks the Final Rule form taking affect until further court review or an act of Congress.
How does this affect employers? Many employers have already taken steps to be compliant. There is nothing in this ruling that would require an employer who has taken steps to be compliant to retract and reinstate prior procedures. Employers who have not made changes, are not required to do so at this time.
It is advisable to remain actively involved in monitoring the continuation of this case, as an appeals court could overturn the injunction and cause the Final Rule to take effect. The court case is STATE OF NEVADA, ET AL v. UNITED STATES DEPARTMENT OF LABOR, ET AL
By: Andrew Seiler
If you have questions about how this ruling affects you or would like information on other payroll related issues, please feel free to contact one of our CPAs at (616) 642-9467 or request a complimentary accounting consultation.