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November 23, 2016

Revised Overtime Regulations Set to Take Effect on December 1 Temporarily Blocked by Texas Court

On November 22, 2016, a Texas federal court issued a preliminary injunction that temporarily prohibits the United States Department of Labor ("USDOL") from implementing and enforcing its revised overtime regulations under the federal Fair Labor Standards Act ("FLSA"). The revised regulations, which were set to take effect on December 1st, would have increased the salary threshold for the administrative, executive and professional exemptions under the FLSA to $913 per week. The court's injunction blocking the revised regulations applies nationwide.  The plaintiffs in the case, which include 21 States, allege that the USDOL's revisions to the overtime regulations are unconstitutional. The plaintiffs filed a request for an emergency preliminary injunction, seeking to halt the implementation of the revised regulations pending a final determination in the case. The court's November 22nd decision granted the preliminary injunction.

Employers should keep in mind that, although the injunction halts the revised regulations from taking effect on December 1st, it is not a permanent injunction, and employers should not assume that the revised overtime regulations will be barred forever.

In addition, many employers have already either raised exempt employees' salaries to meet the new threshold or reclassified employees who are earning less to non-exempt status in anticipation of the December 1st deadline – or, at minimum, communicated plans to do so. From an employee relations perspective, it might be difficult to take back a raise that was already communicated. For those employers who have exempt employees who were going to be reclassified to non-exempt on December 1st, they now have the opportunity to consider postponing the implementation of that change.

Finally, for New York employers, the New York State Department of Labor recently announced proposed amendments to the State minimum wage orders, which increase the State salary basis threshold for the executive and administrative exemptions. The current salary threshold for these exemptions is $675 per week throughout the State. The proposed rule contemplates increased salary thresholds, set to take effect on December 31st, which vary based on employer size and geographic region, as follows:

New York City Large Employers (11 or more employees)
$825.00 per week on and after December 31, 2016
$975.00 per week on and after December 31, 2017
$1,125.00 per week on and after December 31, 2018

New York City Small Employers (10 or fewer employees)
$787.50 per week on and after December 31, 2016
$900.00 per week on and after December 31, 2017
$1,012.50 per week on and after December 31, 2018
$1,125.00 per week on and after December 31, 2019

Remainder of Downstate (Nassau, Suffolk and Westchester Counties)
$750.00 per week on and after December 31, 2016
$825.00 per week on and after December 31, 2017
$900.00 per week on and after December 31, 2018
$975.00 per week on and after December 31, 2019
$1,050.00 per week on and after December 31, 2020
$1,125.00 per week on and after December 31, 2021

Remainder of State (outside of New York City, Nassau, Suffolk and Westchester Counties)
$727.50 per week on and after December 31, 2016
$780.00 per week on and after December 31, 2017
$832.00 per week on and after December 31, 2018
$885.00 per week on and after December 31, 2019
$937.50 per week on and after December 31, 2020

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