Whatever Happened to the Proposed Increase in the Salary Threshold for Overtime?

By Kathleen Jennings (kjj@wimlaw.com)

Last year at this time, employers were scrambling to comply with the Department of Labor’s new regulations which would have more than doubled the existing salary threshold for the overtime exemption for executive, administrative, and professional employees from $23,660/year ($455/week) to $47,892/year ($921/week). The regulations were projected to make 4.2 million more workers eligible for overtime. Advocates for the increase asserted that the new regulations would bring more families closer to a living wage. Businesses argued that the regulations would increase their labor costs to the point where they would need to consider decreasing base salaries or lowering the number of their employees.

Before the regulations took effect on December 1, 2016, everything came to a halt when a federal district court enjoined implementation of the regulations. The Obama administration appealed the injunction to the Fifth Circuit of Appeals. In the meantime, Trump was elected President. Now his Labor Department is handling the appeal on behalf of the government.

So what is happening with those regulations now? Will the salary threshold for the overtime exemption increase?

We received a clue on June 30, 2017, when lawyers for the Labor Department told the Fifth Circuit Court of Appeals that the Labor Department plans to revise the pending Obama era overtime rule. They asked the court to affirm the DOL’s right to use salary levels to determine eligibility for time-and-a-half pay in the future, but to ignore the specific levels contained in the Obama-era regulation: “The Department requests that this Court not address the validity of the specific salary level set by the 2016 final rule ($913 per week), which the Department intends to revisit through new rulemaking.”

In other words, the DOL wants the court to affirm that the department has the authority to set a salary threshold under which workers are automatically eligible for overtime pay for hours worked beyond 40 per week so that the current DOL can make its own changes to that threshold amount.

When will this happen? Not anytime soon. The DOL will not initiate any new rulemaking on the salary threshold for overtime until after the Fifth Circuit rules that the DOL has the authority to do so.

What we know now: The Obama-era increase in the salary threshold for overtime will not be implemented while Trump is in office. Whether the Trump DOL will make any moves to increase that threshold, albeit at a much lower level, remains to be seen.

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2017 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

WAGE & HOUR OPINION LETTERS RETURN!


By Christopher Adams (cda@wimlaw.com)

On June 27, 2017, the U.S. Department of Labor announced that the Wage & Hour Division would resume issuing Opinion Letters. The Obama Administration had discontinued the Department’s long-standing practice in March 2010 in favor of “general guidance,” which in practice allowed the Department greater latitude in changing its litigating position. “Reinstating opinion letters will benefit employees and employers as they provide a means by which both can develop a clearer understanding of the Fair Labor Standards Act and other statutes,” said Secretary of Labor Alexander Acosta. “The U.S. Department of Labor is committed to helping employers and employees clearly understand their labor responsibilities so employers can concentrate on doing what they do best: growing their businesses and creating jobs.” The Department’s announcement today can be found here – https://www.dol.gov/newsroom/releases/whd/whd20170627.

The Wage & Hour Division had been publishing Opinion Letters for roughly seventy (70) years prior to the Obama Administration’s suspension of the practice. Letters were issued in response to specific questions from employers regarding the statutes enforced by WHD, including the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA). The purpose of Opinion Letters was to “provide official written explanations of what the FLSA or the FMLA requires in fact-specific situations.” In addition to providing guidance, Opinion Letters could, to a degree, be used to support a “good faith” defense in later litigation, relieving an errant employer from having to pay liquidated damages in the event a violation was found.

Numerous employer, industry and HR groups had called for a return of the practice. In conjunction with its announcement, DOL has created a new Web page that allows interested parties to search past Opinion Letters or submit a request: https://www.dol.gov/whd/opinion/.

We welcome the return of this traditional source of guidance, which is of great value to employers seeking to comply with these laws.

Chris Adams is a paralegal and a member of the Wage and Hour Practice Group at Wimberly, Lawson, Steckel, Schneider & Stine, P.C. He can be reached at cda@wimlaw.com.

©2017 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.


Six Federal Circuits Now Allow Recovery of Emotional Distress Damages in FLSA Retaliation Cases

By Kathleen Jennings (kjj@wimlaw.com)

In a case of first impression, this week, the Fifth Circuit Court of Appeals held that workers claiming retaliation for funder the Fair Labor Standards Act (FLSA) may recover damages for emotional distress, in addition to the other damages available under the FLSA. (Pineda v. JTCH Apartments, LLC, 5th Cir., No. 15-10932, 12/19/16). The Fifth Circuit joined five other federal appeals courts (1st, 6th, 7th, 8th, 9th) that previously have allowed such damages in FLSA retaliation cases.

Pined, who performed maintenance services for an apartment complex in exchange for reduced rent, sued his employer for unpaid overtime. He prevailed at trial, and the district court awarded him more than $6,600 for unpaid overtime, retaliation and liquidated damages. However, the district court did not allow the jury to consider emotional distress damages for his retaliation claim. The Fifth Circuit reversed this ruling, holding that Pineda can recover damages or his alleged emotional distress. According to the Fifth Circuit, the “expansive language” in a 1977 amendment to the FLSA “should be read to include the compensation for emotional distress” that is typically available to workers who sue for retaliatory discharge.

Emotional distress damages generally are difficult to quantify because they are determined by the jury and can be influenced by sympathy for the plaintiff or anger at the company. In Pineda’s case, it is likely that the jury did not look favorably upon his employer—just three days after Pineda filed his lawsuit, the apartment complex sent Pineda and his wife a notice to vacate their apartment.

Takeaway: Lawsuits based upon wage and hour violations have become very attractive to attorneys who represent plaintiffs, and the availability of damages for emotional distress in retaliatory discharge situations will make these cases even more attractive to them. As in the case of any decision involving an employee who has engaged in protected activity, an employer should consult with experienced employment law counsel before terminating an employee who has filed a complaint for unpaid overtime.

 

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2016 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

 

Appeal of Overtime Rule Injunction Will Not Be Resolved Before New Administration Takes Office

Although the appeal of the injunction blocking implementation of the new overtime rule is on an expedited briefing schedule, briefing will not be completed before the Trump administration takes office. Initial briefs are due to be filed with the 5th Circuit on January 17, 2017, and final Reply briefs are due on January 31, 2017. The Court will hold oral arguments during the “first sitting” thereafter. What makes this interesting is that the initial brief will be filed by the Obama administration in support of the overtime rule and the Department of Labor’s authority to issue it, and the Reply brief will be filed by the Trump administration, which is not likely to support the overtime rule. Indeed, President-elect Trump’s pick for Labor Secretary, Andrew Puzder, has spoken out against the overtime rule.

We will provide further updates as this matter progresses.

©2016 Wimberly Lawson

 

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

Government Files Appeal in Overtime Case

By Kathleen Jennings (kjj@wimlaw.com)

To the surprise of almost no one, on December 1, 2016 (the original effective date of the Overtime Final Rule), the Department of Justice on behalf of the Department of Labor filed a notice to appeal the preliminary injunction issued by the Texas federal district court that enjoined the Department of Labor from implementing and enforcing the Overtime Final Rule. The Notice of Appeal was filed with the U.S. Circuit Court of Appeals for the Fifth Circuit, which is considered to be a fairly conservative Circuit.

In connection with the filing, the Department of Labor issued the following statement: “The Department strongly disagrees with the decision by the court. The Department’s Overtime Final Rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule.”

At this point, it is not clear how the appeal will proceed after January 20, 2017. President-elect Donald Trump and his transition team have not indicated how they will direct the DOJ to proceed with the case after Inauguration Day. On the one hand, most businesses (and traditional Republicans) are not in favor of the new overtime rule. On the other hand, during his campaign, President-elect Trump promised to work on behalf of working class Americans, many of whom would be the beneficiaries of this rule.

We will continue to follow this story.

©2016 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

Overtime Exemption Regulation Blocked


After all the preparation and buildup to the December 1 implementation date of the Department of Labor’s new regulation that would have expanded the number of American employees eligible for overtime, a surprise decision out of a Texas federal court has brought the entire process to a halt. Yesterday, November 22, 2016, a U.S. District Court in Texas granted a nationwide injunction to halt implementation of the salary threshold increases.

The attorneys general of Nevada and 20 other states had asked the court to freeze implementation of the Department of Labor’s May 23, 2016 regulations, which more than doubled the existing salary threshold for the overtime exemption for executive, administrative, and professional employees from $23,660/year ($455/week) to $47,892/year ($921/week).

With the support of over 50 business organizations, including the U.S. Chamber of Commerce, the States moved for emergency injunctive relief. They challenged not only the adverse monetary impact the new rule would have on state budgets, but also the updating mechanism that provided for unlimited, automatic increases to the salary threshold based on labor department wage surveys.

The Court acknowledged that Supreme Court precedent allowed the Fair Labor Standards Act (FLSA) to be applied to the states, and that courts generally defer to regulatory agencies that implement laws through regulations. However, the Court found that Congress’ intent was to exempt bona fide executive, administrative, and professional employees from overtime based on their duties, and that the Department of Labor overstepped its authority in decreeing a salary level that effectively supplanted the duties test: “The Department’s role is to carry out Congress’s intent. If Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change.”

The Court found that the Department’s regulatory action was not entitled to deference under the Supreme Court’s Chevron test. That decision, much debated in recent years, holds that courts should bow to agencies’ interpretation of the laws they enforce, but there are limits. Here, the Department exceeded the permissible limits on construction of the statute by setting the salary level so high that it effectively nullified Congress’ “duties” test.

This decision is obviously big news for both employers and employees. Companies are free to reconsider or suspend wage increases planned to ensure December 1 compliance. Although this decision plainly is independent of the recent Presidential election, it may be a harbinger of regulatory rollback that will have widespread impact on the economy.

Questions? Need more information? Contact Betsy Dorminey (ekd@wimlaw.com)

or Larry Stine (jls@wimlaw.com) or call 404-365-0900.

©2016 Wimberly Lawson

 

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

Yes, Companies Need to Keep Preparing for the New Overtime Rule.

By Kathleen Jennings (kjj@wimlaw.com)


A change from a Democratic to a Republican administration is going to bring changes to many areas of labor and employment law. As a general practice, Republican administrations tend to have less aggressive federal agency enforcement and more “business-friendly” policies and practices. But these changes take time. In the meantime, employers are facing a December 1 deadline for the implementation of the new overtime rule. As we have told you in previous blog posts, under the new rule, the minimum weekly salary that an otherwise exempt executive, administrative or professional employee must receive for the employer to be relieved of the obligation to pay overtime will rise from $455/week to $913/week ($47,476 per year). Many companies already have acted to adjust worker salaries or hourly rates to prepare for this change.

The current Solicitor of Labor has stated that the DOL intends to go forward with implementation of this new rule. Several bills to delay or stop the overtime rule are pending before Congress and could get considered in the lame-duck session, but they all face a certain veto from the President Obama. However, there is a pending federal court case in Texas where 21 states are seeking a preliminary injunction that would block the DOL’s overtime regulation from taking effect. A hearing is scheduled for November 16 in that case. At this point, such an injunction is the only way the rule will not be implemented on time.

Will the Trump administration repeal this rule? A Trump administration could try to overturn the new salary basis test through another Labor Department regulation, but that rulemaking process could take at least two years. By that time, employers would have made the changes necessary to comply. Few employers will want to take back any pay increases that they have given to employees.

Alternatively, Congress could act to delay or overturn the regulation. A bill to delay or rescind the rule passed during the Trump administration probably would be signed by Trump. But again, by that time, employers will have already made the necessary changes to comply.

The most likely scenario is that the provision of the rule that indexes the salary threshold every three years with inflation will be eliminated or changed. Whether the entire rule is repealed remains to be seen. A repeal of the regulation means that the Trump administration must tell 4.2 million Americans who are getting overtime that they are now no longer eligible for overtime.

The takeaway: In the meantime, it is not a good strategy to ignore the implementation of the new overtime rule based upon the belief that the Trump administration is going to repeal it. As noted above, any such change is going to take time. Even if the new Trump DOL fails to aggressively enforce the new rule in the interim, there will be plenty of plaintiff’s employment lawyers who will be glad to pick up the slack and file claims on behalf of individual or collective clients. A company that loses such a lawsuit risks being liable for damages in the form of payment of unpaid overtime, with interest (and doubled if the failure to pay overtime is deemed willful) and costs and attorneys’ fees—the plaintiff’s and the company’s. Is that a risk your company is willing to take?

Questions? Need more information? Contact Wimberly Lawson’s Wage and Hour Law team: Larry Stine (jls@wimlaw.com) or Betsy Dorminey (ekd@wimlaw.com) at (404) 365-0900.

 

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©2016 Wimberly Lawson