Breaking News…Texas Judge Blocks the DOL’s New Minimum Salary/OT Rule
On November 22, 2016, a judge in Sherman, Texas issued an order blocking the implementation of the Department of Labor’s (“DOL”) new minimum salary rule that was set to go into effect on December 1, 2016. What does this mean for employers? It means that the new rule will not go into effect on December 1, 2016 and that current law still applies. Even though the new rule will not take effect as the DOL planned, it may in the future. The DOL has been challenged before. Most recently, the DOL was challenged on its rule requiring that home healthcare workers provided by third party agencies be paid the minimum wage and overtime. Like here, a lower court entered an injunction. On appeal, the appellate court held that the DOL had the authority to implement the rule requiring minimum wage and overtime for many home healthcare workers.
The DOL has 30 days to file an appeal. The DOL has signaled in comments to the press that it believes that the rule will ultimately be found lawful. Even if the rule is upheld by an appellate court, the rule’s ultimate future is uncertain in light of the fact that President-Elect Trump has stated publicly that he does not favor the rule. Further, both the US House of Representatives and the Senate will be controlled by Republicans during the upcoming legislative session of Congress.
For employers who have already implemented changes in advance of the now stayed December 1, 2016 deadline, consideration should be given to maintaining the new status quo. Why? Because reversing the changes that were implemented could lead to employee morale issues especially if salaries were raised. Employees do not like pay cuts and pay cuts definitely affect morale.
For employers who have not implemented any changes in advance of the now stayed December 1, 2016 deadline, those employers may want to take a wait and see approach over the next few months.
Stay tuned for further information and developments on this topic.