States And Congress Challenge New Overtime Rules
Published: October 14, 2016
As we continue marching toward D-day on the Department of Labor’s new overtime rules kicking in, the rules are facing last minute challenges from all angles. First, states and private businesses pushed back. In late September, 21 states jointly filed a lawsuit in the Eastern District of Texas asking that the court block the DOL from implementing the rules. The same day, a group of over 50 businesses jointly filed a similar lawsuit of their own in the same court. A week later, the U.S. House of Representatives passed a bill that would push the rules’ start date out another six months, from December 1, 2016 to June 1, 2017.
The New Exempt Requirements
Under the new DOL rules, the minimum salary threshold for “white collar” exempt employees will effectively double. Effective December 1, 2016, employees will have to earn $955 per week, which translates to $47,476 annually, to be properly classified as exempt. In addition to doubling the salary threshold on the white collar exemptions, the new law will increase the salary necessary to retain the “highly compensated employee” exemption. The HCE exemption currently applies to employees who earn at least $100,000 annually and “customarily and regularly” perform one or more of the exempt duties performed by employees who qualify for one of the white collar exemptions. Under the new law, these same employees will need to earn at least $134,004 annually.
To account for inflation and cost-of-living increases, the new law also establishes a mechanism for automatically updating the salary and compensation levels described above every three years.