Texas Court Blocks New FLSA Overtime Rules

We previously reported on the Fair Labor Standards Act’s (“FLSA”) new regulations, which were scheduled to go into effect as of December 1, 2016.  The new regulations would require that, to be “exempt” from overtime compensation, an employee’s annual salary must be at least $47,476 ($913/week) (up from $23,666, or $455/week, under existing regulations).  This would result in a change of status from exempt to non-exempt for millions of workers. 

On November 22, 2016, a judge in U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction enjoining the Department of Labor (“DOL”) from implementing or enforcing the new regulations.  This is a temporary injunction, which means that the change can be implemented at a later date, depending on how the pending court cases are decided and whether the decision is appealed. 

What Should Employers Do?

Because the ruling came so close to the December 1 effective date, it is possible that if you have employees who would be affected by this salary change, you have already informed them of that.  You can certainly keep these changes in place.  In fact, there is no law that prohibits employers from paying employees by the hour and providing them overtime pay. However, you may wish to take advantage of this reprieve and roll back the changes.  In that case, we recommend advising employees that due to a legal challenge to the regulations, the changes will be halted until further notice. 

For more information, please contact Rachel E. Yarch at 312/840-7029, ryarch@burkelaw.com or Kenneth H. Richman at 312/840-7002, krichman@burkelaw.com.