The Department of Labor Intends to (Eventually) Revise Its 2016 Rule Increasing Salary Minimums for Certain Overtime Exemptions

By Russell F. Van Sickle

As of June 30, 2017, last year’s controversial Department of Labor (DOL) rule increasing the minimum annual salary for most overtime exemptions to $913 per week ($47,476 annually) can now be declared dead.  However, the DOL has not abandoned its plans to increase the minimum salary threshold for the executive, administrative, and professional overtime exemptions.  Eventually, employers could see a renewed effort by the DOL to increase the minimum salary threshold by some not-yet-determined amount.

The DOL’s rule to increase the minimum salary levels to $913 per week never officially went into effect because a Texas court temporarily blocked it about a week prior to its December 1, 2016, effective date.  In the appeal of the Texas court’s decision, government lawyers filed a written brief on June 30, 2017, stating that the DOL “has decided not to advocate for the specific salary level ($913 per week) set in the final rule at this time and intends to undertake further rulemaking to determine what the salary level should be.”  The government’s reference to the “rulemaking” process indicates that the public would have an opportunity to comment on any proposed new salary thresholds before they would take effect.

The remaining issue in the appellate court is whether the DOL has the authority to set salary thresholds in the first place.  The parties who moved to block the DOL rule successfully argued to the trial court that Congress, not the DOL, has the authority to set a salary threshold.  In their June 30, 2017, written brief to the court, the government asked the appellate court to reverse the trial court on that question and reaffirm that the DOL has the authority to establish a salary threshold by issuing an administrative rule.

What this means for now is that any new attempts by the DOL to increase the minimum salary thresholds will not be immediate.  If the appellate court rules that the DOL has no authority to set minimum salary thresholds, there may be no increase to the existing $455 per week minimum until Congress changes the law.  On the other hand, if the appellate court rules that the DOL has the authority to set minimum salary thresholds, the DOL has announced its intention to initiate a rulemaking process to determine a new salary threshold amount.  The rulemaking process is typically a time-consuming process, taking many months, if not years in some instances, to complete.

In summary, the existing minimum salary of $455 per week for the executive, administrative, and professional exemptions to the overtime requirements of the Fair Labor Standards Act will continue into the near future.  It is very important to remember, though, that the salary amount paid to an employee is only one part of a larger set of requirements to qualify for these overtime exemptions.  Employers frequently run afoul of these overtime exemptions not because of the salary amount, but because the employees do not meet the other parts of the exemption requirements.   Failure to properly pay employees can result in significant liability to the employer.

If you have any questions about whether your employees are properly exempt from overtime requirements, contact our Florida Bar Board Certified Labor and Employment Attorneys, Russell Van Sickle or Ralph Peterson.