DOL Exemption Rule

December 1 Has Come & Gone: Latest Questions for Employers

As employers know full well by now, a federal district court issued a nationwide preliminary injunction last week blocking the Department of Labor’s May of 2016 exemption rule that would have significantly revised the standards by which employees are exempt from minimum wage and overtime requirements under federal wage & hour law (“Rule”). Since the Rule was set to take effect on December 1, 2016, most employers spent many months in preparation, analyzing employees’ salaries and exempt status, and planning changes to those employees’ salary levels and exempt status. Further complicating matters, many employers had already communicated those changes and/or implemented those changes when the injunction was issued late in the day on November 22, 2016.

In the latest development, the DOL filed an appeal of the injunction today (December 1) with the Fifth Circuit Court of Appeals. The appeal and review by the Fifth Circuit is likely to take more than two months, during which the injunction will remain in force.

The New Questions for Employers

In light of the expected time needed for appellate review, the Trump administration will likely be in office before the Fifth Circuit takes any action. Now that December 1 has arrived and the DOL appeal has begun, employers have new questions to consider:

  1. Will the Trump administration act with respect to the Rule and, if so, how? Will the Trump administration pull the Rule back in its entirety, or make significant revisions (perhaps spreading the minimum salary increase over multiple years) or make minor revisions (by adding a small business exception, as Trump had mentioned prior to the injunction being issued)?
  2. If the Trump administration takes action with respect to the Rule, when will it do so? The Inauguration is Friday, January 20th. Will the administration take action on Monday, January 23rd? The Trump administration may also wait to see how the legal challenge is resolved by the courts. The Trump administration could also attempt to settle the case with the plaintiffs.
  3. If the Trump administration takes action with respect to the Rule, when would the changes take effect?

Guidelines for Employers

It is now clear that the legal challenge to the Rule will continue and the injunction will remain in effect for several weeks, if not months. Now is the time for employers to carefully review their employee communication plans. Workforce awareness of wage & hour issues is, and will remain, at a very high level. Compensation-related compliance, at both the federal and state level, is critical.

Finally, employers should monitor the status of the court challenge and any indication from President-Elect Trump as to what his administration is likely to do.

Clark & Gotzler will continue to monitor this critical matter. Please feel free to contact any member of the Clark & Gotzler team with questions or concerns.