Court blocks new federal overtime exemption rules

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Today the U.S. District Court for the Eastern District of Texas issued a nationwide injunction that blocks the Department of Labor’s new minimum salary requirements for the federal white collar overtime exemptions, which were set to take effect December 1, 2016. The Court held that the DOL’s new salary rules are contrary to legislative intent and that the DOL exceeded its authority with respect to the new minimum salary requirements, as well as the future automatic adjustments. The new DOL rules had been challenged by 21 states, and this injunction now applies to all 50 states. Although this injunction is not necessarily the end of the battle, the DOL’s position on this rule (which has been backed by the Obama administration) is subject to change with the new incoming administration that is expected to be more business-friendly, and it is possible that this new rule may never come into effect.

However, California employers are still subject to a minimum salary increase under state law:

California has its own minimum salary requirement for white collar overtime exemptions, however the DOL’s new law set a new minimum salary ($913 per week) that substantially exceeded even the California minimum salary requirement for the corresponding overtime exemptions (currently $800 per week). It is important, however, that California employers ensure that they are still complying with the California rules pertaining to overtime exemptions, especially since the minimum salary for the white collar exemptions under California law will increase along with the California minimum wage on January 1, 2017. Specifically, with the increase of the California minimum wage (which will rise to $10.50 on January 1st) the new minimum salary requirement for the white collar exemptions will increase to $840 per week, or $43,680 annually. California employers may want to seek input from their employment counsel regarding these new requirements.