On Tuesday twenty-one states and over fifty businesses filed two separate federal lawsuits seeking to block the new wage rules from the Department of Labor that, effective December 1, will:
- change the overtime salary exemption for white collar workers from $455 per week to $913 week (i.e., a change from $23,660 to $47,476, annually);
- raise the annual salary for “Highly Compensated Employees” from $100,000 to $134,004; and
- institute an indexing mechanism that will automatically update these salary thresholds every three years.
The suits were filed in the Eastern District of Texas and assert that the new rules violate the Fair Labor Standards Act, improperly dictate the wages states must pay workers, and fail to satisfy certain procedural requirements required by Congress. Both suits ask that the federal court declare the new rules invalid and grant a temporary injunction to prevent the rules from going into effect on December 1 while the court considers their claims.
So, what is an employer to do in the face of more uncertainty around the new regulations? Waiting and hoping that the court will delay implementation is not an effective strategy. It could happen—the court could enter an injunction that would push back the deadline until the case can be fully litigated and, once fully litigated, the case could result in overturning the regulations. Odds, though, are that everything will stay on schedule.
Both cases are assigned to a judge appointed by President Obama in 2014, and it is unlikely he will disrupt the rollout of the Obama administration's new DOL rules—let alone during an election year. It would take many months for the cases to reach an appeals court, well after December 1.
The safest approach for employers continues to be to prepare for a December 1 start date for the new DOL regulations. Our firm will monitor these Texas cases and provide updates as developments warrant.
TIP: News about legal challenges to the new Department of Labor rules should not derail efforts to review and update policies and employee classifications in order to meet heightened salary requirements for exempt employees by December 1, 2016.