As every Employer is aware, there has been a flurry of activity to forestall the implementation of the United States Department of Labor’s new Fair Labor Standards Act White-Collar Exemption Regulations that were scheduled to take effect on Thursday, December 1, 2016. There have been two (2) separate Lawsuits filed in the Texas Federal Courts seeking to block these Regulations. As the date of this article, the Court has withheld Temporary Injunction status, so the chances of the December 1, 2016 date being forestalled because of Court action is fairly nonexistent.

As well, the House of Representatives passed a Bill (H.R. 6029) that would delay the implementation from December 1, 2016 to June 1, 2017. While the passage of this House of Representatives Bill was seen as “a glimmer of hope”, since the United States Senate has not taken this matter up for discussion or vote, the forestalling of the December 1, 2016 date by Congressional action is improbable. As well, it should be clearly noted that regardless of whether or not the Senate voted to approve the House of Representatives Action, the matter would have been vetoed by President Obama and, from a practical standpoint, there are not enough votes to overturn any veto. Since there is little change of the December 1, 2016 date being forestalled, Employers should not take a “wait and see approach” in this matter.

As of December 1, 2016, the Regulations will require an exempt Executive, Administrative or Professional Employee to be paid a salary of $913 per week (currently $455 per week) and a yearly salary of $47,476 (currently $23,660). While this is a very substantial change in compensation, it should be noted that the stated goal of the Obama Administration in pushing this issue was to increase the number of individuals who would be eligible for overtime pay. Was this Obama’s way of creating “a growing economy”? It certainly was not a way to help business! It is estimated that approximately 4.5 million workers who were formerly considered as exempt from overtime will now be eligible for overtime compensation (time and one half their regular hourly rate for all hour worked over forty (40) hours in a seven (7) calendar day work period).

It is an absolute necessity that appropriate action be taken to deal with this issue now and it is suggested by the author that if it is necessary to remove an individual from Exempt Status to Nonexempt Status, that the Employer be very clear that this action is being taken predicated on actions by the Federal Government and is not intended to denigrate or reduce in stature the involved Employee – their work is still extremely valuable and needed by the Employer.

The author is also constrained to point out that, while the substantial increase in salary must occur as of December 1, 2016, no Employer should ignore the fact that, even though the salary may be paid as indicated, this does not relieve the Employer of any obligation that the involved individual meet the established tests for qualifying as an Executive, Administrative or Professional Employee. When reviewing whether or not any individual should be continued in Exempt Status, it is an absolute necessity that the individual meet the test for Executive or Administrative or Professional Employee!

Questions? Contact Attorney Walter Liszka at our Chicago office at (312) 629-9300 or by email at waliszka@wesselssherman.com