DOL Salary Threshold Increase Appears Dead – For Now

By Liani J. Reeves - Bullard Law

September 12, 2017

As has been reported in earlier Bullard alerts, in 2016, the U.S. Department of Labor (DOL) finalized regulations increasing the salary threshold for exempt employees from $23,660 annually to $47,476. However, prior to the effective date of the regulation, several groups filed a lawsuit in Texas federal district court challenging the regulation and seeking an injunction to prevent the increase from taking effect.  The Texas court enjoined the regulation from going into effect on a nationwide basis, and the DOL appealed the injunction to the Fifth Circuit Court of Appeals, the federal appeals court with jurisdiction in Texas.
 
Recent developments in the district court and the court of appeals appear to have driven a stake through the heart of the 2016 regulation. On August 31, 2017, the district court, on the merits of the case, granted summary judgment to the plaintiffs challenging the regulation, holding that the DOL’s increased salary threshold for exempt employees conflicted with the Fair Labor Standards Act (FLSA). In the court's view, the salary threshold level set by the regulation effectively eliminated the “duties test” established by the FLSA for the executive, administrative and professional exemptions. Notably, the court limited its holding to the salary level set in the challenged regulation, recognizing that the DOL has the authority to establish a salary threshold test for exempt status.
 
After the district court issued its decision, the DOL asked the Fifth Circuit to dismiss its appeal of the injunction on the grounds that the trial court’s decision on the merits made the appeal moot. It is expected that the court will grant the motion and dismiss the appeal.
 
While the DOL has taken the 2016 final rule off of life support, it appears that the DOL does not plan to abandon the issue entirely.  As reported in an earlier alert http://bullardlaw.com/news/alert/changes-to-overtime-rule-appear-inevitable/, the DOL requested public input regarding an appropriate salary threshold increase for white collar exemptions. Consequently, it appears that the DOL intends to engage in the rulemaking process and issue a regulation establishing a new salary threshold for the white collar exemptions between the existing level and the ill-fated 2016 threshold. We will follow the rulemaking process and keep you apprised of any important developments. In the meantime, please feel free to call us with any questions about the white collar salary threshold or any other wage and hour issue.