Salary Test Ruled Unlawful

Hold the presses!  A federal court in Texas has ordered that the Dept. of Labor’s rule increasing the salary threshold is unlawful.  The rule was to go into effect 12/1/16 and it would have required an annual salary of $47,476 for an employee to be exempt from overtime compensation as a professional, executive or administrative employee.  As a result of the court’s order, the Dept. of Labor is prevented from enforcing the rule.

This order applies nationwide. 

I predict that an appeal of the decision would not result in reinstatement of the rule because the appeal would not be complete before President-elect Trump takes office (and appoints a new head of the Dept. of Labor).  However, I also predict we will see an increase in the current requirement of $23,660 in the near future.  That salary test has been in place since 2004.  I doubt the new salary level will be near the $47,476 salary level of the disallowed rule. 

How employers go about announcing this change to their exempt employees will take some finesse.  If changes had been announced, employers will need to decide whether to maintain the announced changes. 

If you have any questions, please contact Donald S. Smith,

Donald S. Smith

Donald S. Smith


Author Donald S. Smith

Don Smith limits his practice to representing employers and executives in labor and employment matters. He defends employers in cases pending before state and federal courts, the National Labor Relations Board, Equal Employment Opportunity Commission, Indiana Civil Rights Commission, U. S. Dept. of Labor, OSHA, IOSHA, Indiana Dept. of Workforce Development, and Indiana Worker’s Compensation Board. Don advises employers concerning various employment issues such as employee handbooks, employment agreements, severance agreements, covenants not to compete, restrictive covenants, wrongful termination, collective bargaining, labor arbitration, unions, discrimination, harassment, wage and hour matters, unemployment compensation and worker’s compensation.

© Riley Bennett Egloff LLP

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Posted on Dec. 02 2016 by Donald S. Smith