Labor & Employment Alert: Salary Amounts for Overtime Exemptions Have Been Formally Increased - UPDATE

New Salary Minimums Took Effect July 1

We advised in April that the Department of Labor had formally announced final rules to increase the salary minimums for considering an employee exempt from overtime requirements.  Specifically, as of July 1, a salary of $43,888 became the new floor:

Court Actions to Date Have Not Changed the Deadline in Ohio

As there is with virtually every new federal rule these days, there was court litigation to challenge it; but, except for employees working for the State of Texas (which brought one of those cases), at this point, the lawsuits have not excused compliance with the new rules by employers in general. 

Texas Court Suspends the Rules, But Only in Texas

You may have read at the end of last month that the US. Supreme Court had overturned a doctrine that required federal courts to pay special deference to rules made by federal administrative agencies.  The same day that opinion was issued in Washington, a federal district court in Texas relied on that new principle, finding that this new overtime rule was not entitled to special deference and, further, that the focus of overtime exemptions should be on the duties actually performed, as contemplated in the federal statute itself.  Essentially, the court held that, while salary levels may be given some consideration, they cannot be the driving force in establishing overtime exemptions.  Based on that premise, the court issued a preliminary injunction against enforcement of the rules – but, it expressly limited its ruling to employees of the State of Texas.

More briefing will be filed in that case through September 19.  A separate court challenge in another Texas court has briefing scheduled through October 9.  The net result is that, even if the courts considering the new rule make a “final” determination that the new rules are unenforceable (and issue an order that applies across the country), that won’t happen any time soon.

Ohio Employers Need to Comply with the Rules If They Haven’t Already

Net result is, if you have employees you consider to be overtime exempt but their salaries do not reach the new $43,888 minimum, you cannot wait any longer to take action.  The alternatives are: (1) raise those individuals’ salaries; (2) start paying for overtime, despite the persons being salaried; or (3) dictate and enforce a rule that these individuals never exceed 40 hours.

(You may also recall that a second increase is scheduled to take place January 1; and it is included in the court challenges that are pending.  Because the statistical basis for that change is different from the July 1 increase, and because it will result in a significant increase in the number of individuals affected, the courts have some motivation to reach a final conclusion on the new rules prior to January 1 and to consider issuing relief outside of Texas.  So, some time remains before making any changes in anticipation of the January 1 increase.)