New DOL Overtime Rules on Hold

By Derrick Wright

Earlier this year, the federal Department of Labor (DOL) issued new regulations to increase the minimum salary that must be paid to those employees who are “exempt” from overtime requirements under the Fair Labor Standards Act. The current minimum salary to qualify as exempt is $455 per week (equal to $23,600 annually), which was going to increase to $913 per week (equal to $47,476 annually) under the new regulations. In addition, the new regulations would require automatic increases to the minimum salary every three years without further rulemaking by the DOL. The original effective date for the new regulations was December 1, 2016.

However, a group of 21 states, including Kentucky, filed suit in federal court in Texas to enjoin and invalidate the new regulations as exceeding the DOL’s rulemaking powers. Yesterday evening, the federal judge in that case issued a preliminary injunction that will temporarily enjoin the new regulations from taking effect on December 1 as originally scheduled. The judge’s ruling, which essentially agreed that the new minimum salary and automatic three-year increases were improper, has nationwide effect.

Of course, the injunction is preliminary in nature at this point and litigation is ongoing, which may result in the injunction being reversed and the new regulations could still come into effect at a later date. The outcome of further litigation is now very uncertain, especially with an upcoming change in administration that may be less inclined to defend the new regulations in their current form should the issue still be unresolved when the change in administration occurs early next year.

For now, the injunction relieves employers from having to conform to the new regulations on December 1 and any planned adjustments to comply with the law may be delayed. From a practical standpoint for those employers who would prefer to avoid implementing any changes, delaying implementation and maintaining the status quo pending the end of the litigation may be the best course of action instead of reacting to potentially multiple changes in direction as the litigation unfolds. Sturgill Turner will monitor the litigation and update you as the litigation continues. However, please contact Derrick Wright if you have any questions or concerns regarding the new regulations, their status, or how to react to the latest legal developments.