ALERT: Overtime for White Collar Workers

 

UPDATE ON OVERTIME RULES

 

What happened?
Yesterday, a federal judge in the Eastern District of Texas issued a
nationwide preliminary injunction against the Department of Labor's ("the
DOL") new rule increasing the salary-level test for exempt employees from
$23,660 per year to $47,476 per year.  The injunction blocks the new rule
from going into effect on December 1, 2016.

Can employers in Washington rely on the Texas court ruling?
On its face, the ruling says it is nationwide.  However, the federal courts
in Washington may decide not to follow the Texas court's ruling because
Washington was not a party to the decision.  It is unlikely that the courts
here in Washington will rule on this issue prior to the December 1, 2016
effective date of the new rule, which leaves Washington employers in a state
of uncertainty unless the DOL issues a statement indicating whether or not
it intends to enforce the rule in states that were not a party to the Texas
lawsuit.

What are the possible consequences if a Washington employer does not raise
exempt employee's salaries on December 1?

If the Washington courts decide that the Texas decision does not apply to
them, then any Washington employers who failed to raise the salary of their
exempt employees to $47,476 per year on December 1, 2016 would be liable for
wrongful withholding of wages and would owe back wages to the affected
employees, plus interest at 12% and any attorney's fees they may have
incurred to collect the money.  The employees or the DOL could also make a
claim for double damages, but employers may be able to avoid double damages
by arguing that they, in good-faith, relied upon the Texas injunction.

What are the possible consequences if a Washington employer does raise
exempt employee's salaries on December 1?

The Texas injunction does not prohibit employers from raising salaries on
December 1.  The only consequence is that if the new salary rule is thrown
out, the employer will have paid the employee more than the law required.

What do you recommend?
At this point, we recommend waiting until we are closer to December 1 to
finalize any decisions about employee raises to meet the salary test to see
if the DOL will issue any guidance as to whether it intends to enforce the
rule in states that were not a party to the Texas lawsuit.  If no guidance
is issued by the DOL, we suggest weighing the cost of the salary increases
and effect on morale of not giving an employee an increase against the risk
that employers will be ordered to pay more than back wages to employees if
the DOL rule is found to be applicable to Washington employers.

What if I have employees in others states?
Contact us to see if the states where your employees are located were named
as parties in the Texas lawsuit.

What if I have other questions?
Please call or email your Employment and Labor Law attorney.


Ogden Murphy Wallace's Employment and Labor Law Practice Group

Gil Sparks  |  Attorney
One Fifth Street, Suite 200 Wenatchee, WA 98801
phone: 509.662.1954  |  fax: 509.663.1553

gsparks@omwlaw.com

For more information on the Overtime Final Rule, see www.dol.gov/overtime

 

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