Important Employment Update Overtime Exemption Salary Increase Put On Hold

The Department of Labor’s regulation set to increase the Salary Requirement for employees to be exempt from overtime will not go into effect on December 1, 2016.

Court Ruling: On November 22, 2016, the U.S. District Court Judge of the Eastern District of Texas placed an injunction (a stop) on this regulation stating that the Labor Department exceeded the authority granted to it by Congress in creating this regulation. According to the District Court, the Labor Department has the right to define which workers are considered salaried but only based on the duties they performed, not by how much they make. The right to decide whether a salary is increased is left to the authority of Congress.

What does this mean: The Court’s Ruling effectively puts a hold on the Labor Departments proposed salary increase for now. This means the Salary Requirement will not increase as previously proposed.

Exempt Employee Category	Current Salary Level Exemption	Post December 1, 2016 Salary Level	Yearly Increase Allotment
Administrative, Executive, Professional	$23,660.00	$47,476.00	Set at 40th Percentile of Salaried Employees
Highly Compensated	$100,000.00	$134,004.00	Set at 90th percentile of Salaried Employees

Other requirements for overtime exemption: It is still important to remember that while the Salary Exemption increase will not go into effect, Employers must still ensure that the overtime exempt employees meet certain job duties requirements. The job duties requirement remains the most common pitfall for employers attempting to classify employees as exempt from overtime.

Continued monitoring: It will be important to monitor the progress of future court proceedings surrounding this issue. As this matter proceeds to the Court of Appeals, and perhaps to Supreme Court, at any time the injunction may be lifted (removed) and the Salary Requirement increase could go into effect. If you have any questions on this issue, please do not hesitate to contact our Mesa employment law lawyer Brad Denton at Denton Peterson P.C. at 480-660-0879 or at [email protected].