New Salary Threshold declared invalid; “white collar duties tests” under existing law remain unaffected
November 22, 2016
Late on Tuesday, November 22, a federal district judge in Texas issued a preliminary injunction blocking implementation of the Overtime Final Rule, ruling that the U.S. Department of Labor exceeded its authority. Barring a last-minute appeal, the overtime rule will not go into effect as scheduled on December 1 because of this decision.
At issue is the question of which employees qualify for an exemption from the requirement under the federal Fair Labor Standards Act (FLSA) that most employees are entitled to time and a half overtime pay for work in excess of 40 hours in a week. The FLSA exempts from the overtime requirement “any employee employed in a bona fide executive, administrative, or professional capacity,” often called the EAP or “white collar” employees. Current regulations require that employees must possess the duties of executives, administrative workers, or professionals and be paid more than a minimum salary. The overtime rule published by the Labor Department in May, and set to go into effect on December 1, would have more than doubled the existing “salary level test” for exempt white collar employees from $455 per week ($23,660 per year) to $913 per week ($47,476 per year).
Twenty-one Governors and Attorneys General filed suit in federal court challenging the overtime rule on several grounds. Siding with the states, Federal Judge Amos Mazzant held that the white collar exemption is clearly based on the duties that individual employees perform, and that the Labor Department did not have the authority to create a different or higher standard. Specifically, he ruled: “Congress gave the Department the authority to define what type of duties qualify [for the overtime exemption] — it did not give the Department the authority to supplant the duties test and establish a salary test that causes bona fide EAP’s to suddenly lose their exemption ‘irrespective of their job duties and responsibilities.’”
The judge issued a nationwide preliminary injunction. The Department of Labor is expected to appeal the decision, meaning that injunction could be lifted and the overtime rule put in place in a matter of weeks or months.
Our thanks to the National Council of Nonprofits for the above update. We will share more information as it becomes available.
REMINDER: The judge’s ruling above ONLY affects the new salary threshold that was to take effect December1. The administrative, executive or professional duties tests (among others) that must be met for an employee to qualify for exemption from overtime are not affected by the ruling. All employers, including non-profits, should still examine carefully whether their employees meet the criteria to qualify for these exemptions. The Center for Non-Profits presented a webinar on November 9, "Federal Overtime Regulations: It’s Not Just About the Salary,” that focuses on non-profits and the duties tests under the FLSA. The webinar recording is available for free exclusively to Center for Non-Profits members. webinar information
Previous information about the Federal Overtime Rules
The information and articles below were issued prior to the November 22, 2016, ruling by a federal judge blocking the higher salary thresholds under the U.S. Department of Labor overtime regulations. That decision could be appealed and the regulations subsequently reinstated by a higher court. We are keeping this information posted for reference.
November 14, 2016
As we reported previously, on May 18, 2016, the U.S. Department of Labor (DOL) announced its final overtime regulations that will make mandatory overtime requirements applicable to most employees earning less than $47,500/year, including employees of non-profits. The new salary level threshold will apply to any employee who works more than 40 hours in a week, regardless of whether individual employees are considered salaried or hourly. The rules take effect December 1, 2016.
SPECIAL WEBINAR RECORDING - Federal Overtime Regulations: It’s Not Just About The Salary
Non-profits also need to be aware that even if the salary threshold is met, employees must still satisfy other criteria, particularly the administrative, executive or professional "duties tests," in order to be exempt from overtime requirements. The Center for Non-Profits hosted a webinar on November 9, 2016, regarding the new DOL rules, with special attention to the duties tests that must be met for an employee to be eligible for one of these "white collar exemptions." The webinar recording is available exclusively to Center members. more information
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