Founder and Managing Partner
Last year, there was much publicity and concern arising from the Department of Labor’s new minimum salary levels for employees to qualify for the white collar exemptions from minimum wage and overtime pay under the Fair Labor Standards Act. These new minimum salary levels would have dramatically increased from $23,000 to $47, 476 per year, and included automatic upward adjustments over time. However, a Texas court has stepped in to invalidate these changes.
Specifically, last week, a Texas Federal District Court ruled that the DOL overreached by setting salary levels that were so high that they largely rendered meaningless the other criteria for the exemption, specifically, the nature of the duties performed by the employees. In other words, the court found that the new salary standard was so high and eliminated so many formerly eligible employees, that it would effectively become the only relevant criteria for the exemption, thereby nullifying the law’s other explicit requirements.
As such, employers can proceed under existing salary requirements. But California employers are not entirely clear in the status quo because California has its own minimum salary requirement for the white collar exemptions that is tied to the state minimum wage. That minimum salary level is currently $43,680 and will adjust upward as the California minimum wage increases. Moreover, there is movement in the state legislature to further raise California’s own minimum salary level for the white collar exemptions. As such, California employers should watch for further updates on this issue.