Preliminary Injunction Temporarily Blocks 12-1-16 Enforcement of White Collar Exemption Regulations
November 28, 2016

Employers nationwide received an early gift this holiday season - on November 22, 2016, a federal court in the Eastern District of Texas issued a preliminary injunction preventing the Department of Labor (DOL) from enforcing its hotly-contested white collar exemption regulations, which were previously set to take effect on December 1, 2016. Those rules (before the preliminary injunction) would have required changes for exempt employees, including:

  • Raising the minimum weekly salary for an exempt employee to $913 ($47,476 annually);
  • Increasing the federal highly compensated employee exemption to $134,004 per year (California has no such standard); and,
  • Establishing a mechanism for automatically updating the salary and compensation levels every three years.

In a bid to stop (or at least stall) the implementation and enforcement of these new rules, more than 20 states banded together and challenged the regulations in the Eastern District of Texas. Although a detailed discussion of the nuanced legal arguments raised by the collective states is beyond the scope of this short update, suffice it to say that the states' main contention was that the DOL had overstepped its authority.

What does this mean for employers? For now, the December 1, 2016, deadline (dreadline?) has been postponed. With the preliminary injunction in place, the DOL cannot enforce the new regulations as it planned to do on December 1, 2016. Employers should note, however, that this injunction is only preliminary (temporary) in nature; it is a short delay to allow the court sufficient time to reach a final decision. And, although the court's reasoning and its tone in the preliminary injunction order suggest that the regulations are unlikely to survive, the possibility remains that the court could ultimately decide that the regulations are valid and enforceable. The DOL can (and likely will) immediately appeal the district court's ruling on an emergency basis to the Fifth Circuit, and then on to the U.S. Supreme Court if necessary. There is also some uncertainty about what a Trump White House might mean for the rules, even if they do survive judicial scrutiny.

In summary, while the preliminary injunction is a welcome early gift for employers, it would be wise to avoid becoming too attached to that shiny new gift for now, since the court system might just take it back. Until we have some finality on the ultimate outcome of the new rules, we will be watching the ongoing drama in the Eastern District with bated breath, and will certainly keep you posted on any new developments as they arise.

As always, if you have questions about exemption classifications, salary/duty requirements or any other employment law questions, contact the employment attorneys at LightGabler for assistance.

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