The FLSA’s 2016 White Collar Salary Rule: R.I.P.

FIRM NEWS24 Apr 2024 Shareholder Bob Keach Featured in TMA Podcast on Subchapter V

In Brief

Employers should stay tuned to the potential for regulatory change in the salary level, although recent developments suggest there is no reason in the foreseeable future for this issue to remain in the center of the spotlight.

Employers won’t soon forget the shock and awe caused by the controversial Overtime Salary Level Rule that would have swept millions of workers classified as exempt under the FLSA into the hourly, overtime-eligible category. The Rule was enjoined by a federal court in Texas in November 2016, just days before it was to take costly effect. The 2016 Rule has made courtroom headlines once again, and employers may understandably be confused – and concerned – about its status.

The Latest Facts

Fortunately, the recent developments provide reassurance to employers that the 2016 Rule is virtually dead. On August 31, 2017 the same Texas court that issued the 11th hour temporary stay invalidated the Rule permanently. Now, the U.S. Department of Labor has withdrawn the Obama-era appeal of the November decision, which had been pending in the Fifth Circuit. The DOL says that the appeal is “moot”, since the Rule has permanently been struck down. There is currently no court action pending that would keep the 2016 Rule—which would have doubled the minimum salary threshold required to qualify for the FLSA’s “white collar” exemption—alive.

What’s Next

While the prospect of judicial revival of the 2016 Rule seems to be over, the next question is whether the Trump-era DOL will make its own effort to revise the salary test upward, or whether it will simply stick with the current salary threshold of $23,660 that has been in effect since 2004. During confirmation hearings the new Secretary of Labor, Alex Acosta, implied that the salary level was due for an update, and in July the DOL asked for feedback on ways to revise the 2016 Rule—the first step in the rule-making process. But even if the DOL continues down the rule-making path toward a revision (which is no sure thing), it’s a safe bet that any proposed change would be incremental and modest rather than drastic.

So, while employers should stay tuned to the potential for regulatory change in the salary level, there is no reason in the foreseeable future to focus hard on this issue. Other FLSA requirements, including calculating and paying overtime correctly, applying the duties tests for exemption, tracking “time worked”, and maintaining good wage records, all remain perennial challenges for employers and keep the FLSA at the top of H.R.’s compliance list.

Recently we have seen an uptick in both ME and federal DOL wage and hour investigations across all industry sectors.

For questions about state or federal FLSA requirements and compliance, please contact Linda McGill, Glenn Israel or any member of our Labor and Employment Law Practice Group.