Texas Judge Stops Obama’s Salary Increase

On November 22, 2016, Judge Mazzant of the United States District Court for the Eastern District of Texas issued a nationwide preliminary injunction to stop the Department of Labor’s (“DOL”) new regulation to increase the minimum salary for exempt employees from $455 per week (or $23,660 per year) to $913 per week (or $47,476 per year). This regulation is referred to as white collar exemptions.  The minimum  salary increase was scheduled to become effective December 1, 2016.

The injunction was in response to emergency motions filed by 21 states to prevent the new regulation from becoming effective. The states argued that the salary increase was without statutory authority and simply too high.

The Texas judge agreed with the states and ruled that Congress intended the white collar exemptions to exempt from overtime employees who are engaged in executive, administrative, and professional duties without a focus on minimum salary level.  The judge also stated that “Congress, and not the Department, should make that change.” Despite the fact that the DOL has increased the minimum salary for exempt employees seven times since 1938, the Texas judge ruled that the DOL exceeded its authority by increasing the minimum salary level.

For now, the new regulation will not become effective on December 1, as planned.  Litigation continues.

Of course, this creates uncertainty for employers. Employers who have already announced the salary increase to employees should consult with counsel before taking any additional steps.