On November 22, 2016, Judge Amos L. Mazzant, U.S. District Court Judge for the Eastern District of Texas, halted implementation of the new federal overtime rules that were set to take effect on December 1. He agreed with numerous states and business groups who argued that enforcement of the regulations should be suspended – at least temporarily – until the Court has an opportunity to consider whether the regulations were properly adopted.
The overtime rules, adopted earlier this year by the Department of Labor, imposed a new salary test for determining whether a professional, administrative, or executive employee is exempt from overtime pay, specifically requiring a salary floor of $913 per week (i.e., $47,476 per year). Judge Mazzant ruled that the regulations are arguably unlawful for two reasons:
- The new salary level improperly excludes consideration of the employee’s duties.
- The regulations improperly provide for automatic increases to the $47,476 salary level.
This means that, for now, employers need not raise salaries to $913 per week to ensure their professional, administrative, and executive employees are properly exempt from overtime.
Employers in California, however, still must meet the California requirements which provide that in order to exempt an employee from overtime, he or she must meet the duties test and must earn at least twice the minimum wage on a salaried basis.
