Member News – CohnReznick
December 29th, 2016
The proposed “white collar” exemption rule was set to go into effect on December 1. However, on November 22, a U.S. District Judge in Texas put the rule on hold. The Department of Labor (DOL) filed an appeal to the injunction. The original rule addressed the FLSA issue that required overtime to be paid to employees when exceeding 40 hours in a work week. CohnReznick shares its opinion on the delay.
Under the new rule, the annual salary used in determining whether an employee qualified for exemption was doubled, from $23,660 to $47,476. Therefore, if an employee previously met the EAP exemption, their salary would have had to be at least $47,476 to continue meeting it. The new rule also raised the Highest Compensated Employee (HCE) threshold from $100,000 to $134,004. These salary thresholds would have been adjusted every three years under the new rule.
CohnReznick shares its opinion on the delay:
The final outcome of this issue remains to be seen. While the injunction is in effect, the old salary thresholds will continue to apply. The DOL has requested an expedited appeal, so it is possible the new rule may ultimately be the law, although it may be short-lived. With the new presidential administration taking office in January, it is possible the thresholds may be changed entirely, and/or the appeal withdrawn if it is still outstanding.
Although there is much uncertainty surrounding the issue, there are some steps that not-for-profits should undertake, beginning with consulting with legal counsel. Reviewing staff positions and related responsibilities, hours typically worked, and current salary levels are equally important. Continue to monitor the status of the appeal and the injunction. Finally, develop a strategy for communicating with employees.