Just before Thanksgiving, a U.S. District Judge agreed with 21 states and a coalition of business groups and blocked the Obama administration’s new overtime rule. The judge determined the rule is unlawful and granted a motion for a preliminary nationwide injunction, suspending the implementation date indefinitely.
The rule was to be formally implemented later this week on December 1, 2016. Earlier this year, the Obama administration had released a final rule that raised the minimum salary level to be considered an exempt employee from $23,660 per year to $47,476 per year.
The judge ruled the federal law governing overtime does not allow the Department of Labor to decide which workers are eligible based on salary levels alone. He said that while the Fair Labor Standards Act states that employees can be exempt from overtime if they perform executive, administrative or professional duties, the rule essentially creates a de facto salary-only test.
Moving forward, the Labor Department can appeal to the 5th U.S. Circuit Court of Appeals. It is widely believed that under a Trump administration the Department would drop the appeal. During the presidential campaign, Trump said the rule was a burden for businesses and he would seek to roll back or delay it.
Until a final resolution is reached, employers no longer have to comply with the $47,476 minimum salary level for exemption on December 1, 2016. For Buffalo Niagara companies, this means the minimum salary level for exempt employees reverts back to New York State’s minimum, which is higher than the current national standard.
Check back here for updates on the Federal Overtime Rule and any changes to New York State’s salary exemption.
12/23/2016 UPDATE: See our blog, Member Alert: NYS Exempt Threshold Increase – Employers need to now direct their attention to the New York State increase to the exempt threshold taking effect December 31st, 2016.