Category Archives: department of labor

IMPORTANT DOL UPDATE: The Final Rule on Doubling White Collar Salaries Is Shot Down By Texas Judge

Contributed by Heather Bailey, September 6, 2017

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Concept of time with businessman holding a clock

Previously, we reported to you on the U.S. Department of Labor’s (“DOL”) Final Rule that raised the minimum salary threshold required to qualify for the Fair Labor Standards Act’s (“FLSA”) “white-collar” exemptions (executive, professional and administrative classification) from $455 per week ($23,660 annually) to $913 per week ($47,476 annually) as of December 1, 2016 (see our prior articles: U.S. DOL Publishes Final Overtime Rule and; Are you ready for December 1st? The FLSA Salary Changes Are Almost Here).

The Obama administration’s goal with this Final Rule, announced on 5/23/2016, was to give approximately 4 million workers the ability to earn overtime pay, instead of getting paid a fixed salary since many employers would not be able to afford to pay their otherwise exempt employees $47,476 annually. Implementation of this new rule had been temporarily stalled in a federal court in Texas just prior to it going into effect this past December 1st (see our prior articles: Court Enjoins DOL Overtime Rule and; Business Realities Under the Halted DOL Final Overtime Rule).

However, on August 31, 2017, Judge Amos L. Mazzant of the United States District Court, Eastern District of Texas answered many business owners’ prayers by ruling the DOL indeed exceeded its authority by more than doubling the minimum salary threshold for exempting white-collar employees (see the full case here).

The judge did not say the DOL could not raise the minimum salary at all. Rather, relying heavily on Chevron, USA, Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984), the judge stated that by more than doubling the current minimum threshold, the DOL effectively eliminated the need for looking to the employees’ actual duties and responsibilities—which was the essence of Congress’s intent when it created the FLSA white collar exemptions. The judge looked to the plain meaning of what it means to work in an executive, administrative and professional capacity concluding the primary focus was not the salary minimum but instead the actual duties and responsibilities.

What are the ramifications? The Department of Justice voluntarily dismissed its appeal of Judge Mazzant’s earlier preliminary injunction ruling putting the Final Rule on hold, so it seems unlikely it will appeal this ruling. However, this decision could catapult the Trump administration to issue a new rule providing for a more moderate increase in the minimum salary threshold – one that does not vitiate the primary focus of the “white collar” overtime exemptions: the employees’ actual duties and responsibilities.

Practice Tips:

  • The good news for now is that employers can continue to follow the previous DOL regulations for white collar exemptions (i.e., duties test and salary test).
  • If you did not do so previously, analyze your exempt positions to confirm they meet the duties test and are truly exempt positions. For example, is your manager truly a manager or is she really a lead worker? Is this manager hiring, firing and disciplining two or more employees?  Is your payroll clerk clearly just doing data entry or is he exercising independent discretion and judgment?  If the position does not meet the duties test, you transitioning the position to make it overtime eligible.
  • Ensure management is trained to enforce policies related to overtime pay such as those relating to working time, time clock procedures, meal and rest breaks, working off the clock issues, etc.
  • Did you already make changes to your employees’ pay or duties based upon the final rule going into effect on December 1, 2016?  While there are ways to change those decisions (i.e., you can change an employee’s pay moving forward for work not yet performed), you need to keep in mind morale issues for employees whose compensation may decrease either by way of a salary reduction or loss of overtime pay.  In these situations, it is highly recommended that you work with your counsel on determining the best practices for your business and your workforce.

With the judge’s ruling, many business owners will be able to find some comfort in being able to keep their exempt employees on a reasonable salary without having to break the bank.

DOL Reinstates Wage and Hour Division Opinion Letter Process

By Steven Jados, June 29, 2017

On June 27, 2017, the United States Department of Labor (DOL) announced that it is reinstating the DOL’s Wage and Hour Division opinion letter process, which was in existence for more than 70 years prior to a change in procedure in 2010.

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gavel on a white background 

DOL opinion letters allow employers (and employees) to submit questions to the DOL regarding whether particular employment practices comply with the laws the DOL enforces. The DOL then has the discretion to respond, publicly, with appropriate guidance. Opinion letter guidance can be presented to courts and investigators—by the employer that submitted the question, or by any other employer that reasonably relied on the opinion letter’s guidance—as part of a good-faith defense to allegations of wage and hour law violations.

To aid the opinion letter process, the DOL has established a website that provides additional information on how to submit opinion letter requests, and how to access prior opinion letter guidance.

The bottom line: Employers with close-call questions as to whether their wage and hour practices comply with the law now have another avenue to use to avoid potential exposure to wage and hour claim liability.  With that in mind, employers who wish to make use of the DOL’s opinion letter process should review the DOL’s website, and contact experienced labor and employment counsel to obtain additional assistance with drafting and submitting opinion letter requests.

President Trump Orders Immediate Freeze on Pending Regulations

Contributed by Carlos Arévalo, January 26, 2017

18108277_sOn January 20, 2017 shortly after taking office, newly sworn in President Donald Trump directed White House Chief of Staff Reince Priebus to issue a memorandum to the heads of executive departments and agencies directing them not to send any regulations to the Federal Registry until further notice, to withdraw any proposed regulations that have not been published and to postpone for 60 days the effective dates of regulations that have been published by the Officer of the Federal Register. As stated in Priebus’ memorandum, the purpose is to ensure the President’s appointees or designees “have the opportunity to review any new or pending regulations” and to consider “questions of fact, law, and policy that [such regulations] raise.”

With the change in administrations, this is not a surprising action. In fact, former President Barack Obama took a similar action in January 2009, at the beginning of his first term, by effectively freezing regulations that were pending from the former President George W. Bush’s administration.

What Does This Mean for Employers?

This means that any proposed or pending regulations are now facing uncertainty as to whether they will go forward, be overhauled or discarded. The most prominent pending regulations that this could impact is the Department of Labor (DOL) Final Overtime Rule. While the Final Overtime Rule was set to go into effect December 1, 2016, it was blocked from taking effect by United States District Court Judge Amos Mazzant in his November 22, 2016 ruling. Since the Final Overtime Rule did not go into effect the freeze on regulations could impact the Final Overtime Rule. However, it is likely that in order to repeal or reverse the Final Overtime Rule or any other regulations that have been finalized, President Trump would need an act of Congress or have the federal department or agency propose and enact a new regulation to replace the current one. Alternatively, since the DOL has appealed Judge Mazzant’s decision and pursued an expedited briefing schedule on December 1, 2016, President Trump could direct the DOL to abandon or withdraw the appeal. Thus, until the Fifth Circuit Appellate Court issues a decision on the appeal, or until such time as the President or DOL take action on the Final Overtime Rule, our recommendation, just as we suggested last November 2016 in response to the District Court granting an injunction on the DOL Final Overtime Rule, is that no action be taken until the issue is resolved.

With respect to other regulations, just like we stated with respect to President Trump’s executive order regarding the Affordable Care Act, it is too early to tell how or when employers will be impacted and what the new administration will ultimately do with respect to different regulations enacted during President Obama’s administration and regulations that impact businesses.

For our part, we will continue to monitor developments and provide additional information as it becomes available.

URGENT ALERT: Court Enjoins DOL Overtime Rule!

Contributed by Noah A. Frank, November 23, 2016

On November 22, 2016, a Texas federal district court granted a nationwide preliminary injunction against the U.S. Department of Labor’s overtime rule. State of Nevada v. U.S. Dept. of Labor, No. 4:16-cv-00731-ALM (E.D. Tex. 11/22/2016).

This injunction halted the rule’s December 1, 2016 implementation that would have more-than-doubled the salary level to $913 per week for overtime-exempt executive, administrative, and professional white collar workers.

We will provide additional details on what this preliminary injunction means for employers after the Thanksgiving holiday.

DOL FLSA Overtime Rule May Be Suspended

Contributed by Heather Bailey, November 17, 2016

The Honorable Judge Amos L. Mazzant III in the pending DOL overtime preliminary injunction lawsuit, State of Nevada et al v. United States Department of Labor et al. (Case No. 4:16-cv-00731-ALM, Eastern District of Texas), heard arguments yesterday as to whether the DOL should be enjoined at this time from implementing the new overtime and salary increase rule. The court – questioning the nationwide implications at stake here – was not interested in what the next administration will do come 2017 and wanted to focus on the law now.

After hearing arguments, the judge took them under advisement and stated he “hopes” to have a ruling by November 22, 2016. If he denies the preliminary injunction motion, he will have an additional hearing on November 28, 2016 before the December 1 implementation deadline.

What does this mean for employers who have been preparing for the new rule come December 1?  Keep preparing, however, it is perfectly permissible (and probably a good idea) to wait and see how Judge Mazzant rules next week before actually implementing any salary increases. Stay tuned as we will keep you updated come the judge’s ruling on November 22nd.  

Are you ready for December 1st? The FLSA Salary Changes Are Almost Here

Contributed by Sara Zorich, October 13, 2016

The U.S. Department of Labor’s (DOL) implementation of its Final Overtime Rule and an increase for salaried exempt employees to $913/week is set to go into effect on December 1st. We want to debunk the myths of what could and could not derail the implementation:

  1. 63527433 - december 1. calendar on white background. 3d illustration.New Litigation – On September 20, 2016, two lawsuits were filed to enjoin the new regulation from taking effect: States of Nevada et. al v. U.S. Department of Labor et. al., Case 4:16-cv-00731, Eastern Dist. TX and Plano Chamber of Commerce et. al v. Thomas Perez et. al., Case 4:16-cv-00732, Eastern Dist. TX. Both lawsuits are seeking to enjoin the DOL from implementing the salary increase on the basis that the promulgation of the rule was done in violation of the Administrative Procedure Act and the DOL has exceeded its authority. As of today’s date, there has been no date for a hearing on the request for injunctive relief. While we anticipate that a hearing may be held on the request for a stay of the salary increase before the December 1, 2016, no date is currently set. The court could enjoin the DOL from implementing the new rule but there is no certainty that such will occur.
  1. Presidential Race – While Presidential candidate Donald Trump has expressed opposition to the DOL’s salary increase, his potential election to President of the United States will likely have little impact on the implementation of the new salary increase. If he is elected, his inauguration will not occur until after the new rule goes into effect, thus making it highly unlikely that any reversal of the regulation would take effect until 2017.
  1. New Bills –In March 2016, the Protecting Workplace Advancement and Opportunity Act (S. 2707 and H.R. 4773) to nullify the DOL proposed rule was introduced. These bills have not been sent for vote by either the House or Senate. On September 21, 2016, the Regulatory Relief for Small Businesses, Schools, and Nonprofits Act (H.R. 6094) was introduced which requests postponement of the the DOL’s new overtime regulation from December 1, 2016 to June 1, 2017 for small businesses, schools and nonprofits. The House passed H.R. 6094 on September 28th and it was sent to the Senate on September 29th. To date, the Senate has not voted on the bill.

The bottom line is that there is great uncertainty if the DOL’s Final Overtime Rule can or will be derailed prior to December 1st. Thus, employers must continue to push forward with analyzing their exempt positions and making determinations as to whether each position meets both the salary basis and duties tests for exemption from overtime under the Fair Labor Standards Act. While you do not need to implement any salary increases until December 1, 2016, companies should be ready to make changes on or before that day and should not rely on the “hope” that the DOL’s implementation will be delayed.

URGENT ALERT: U.S. DOL PUBLISHES FINAL OVERTIME RULE

Contributed by Jeff Risch and Sara Zorich, May 18, 2016

Today the US Department of Labor (“DOL”) issued its long awaited final rule increasing the minimum salary requirements under the Fair Labor Standards Act (“FLSA”).

Key Provisions of the Final Rule

The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt.

Of particular significance, the Final Rule:

  1. Sets the standard salary level at $913 per week – $47,476 annually;
  2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to $134,00; and
  3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels using the above percentiles.

Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

The effective date of the final rule is December 1, 2016. The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.

A copy of the final rule as well as other information can be found here.

In Light of these Final Regulations, Employers MUST Analyze the Following:

  1. How many of your current employees are affected by this final rule?
  1. Is a salary increase for those who do not currently meet the salary requirement a plausible financial decision to the required increases?
  1. Are there job positions that should now be reclassified as non-exempt and the employees will now be entitled to overtime if they work over 40 hours?
  1. Review your handbooks and policies regarding exempt and non-exempt status.
  1. Tighten up your policies regarding working overtime and analyze the possibility of limiting the number of overtime hours worked for non-exempt employees.
  1. Review and update policies and practices concerning “off the clock” time and ensure that there are proper controls regarding all hours actually worked by non-exempt employees.
  1. Review benefits applicable to exempt and non-exempt employees and how a change in status may impact the benefits to your employees.

Employers have OPTIONS Regarding these Proposed DOL Changes:

  1. Increase the employee’s salary to meet the new regulations so the employee continues to meet the exemption;
  1. Keep the salary the same and pay the required overtime payments based on the employee’s regular rate of pay when the employee works over 40 hours (but you must track all hours worked);
  1. Reduce the employee’s salary or change the employee’s pay to a lower hourly rate so the total earnings do not change after overtime is paid;
  1. Eliminate the employee working any overtime hours; or
  1. Some combination of the above options including possible Reductions in Force.

Legal counsel will be able to assist employers in navigating these business changes.