Jackson Lewis Principal Eric Magnus contributed to this post.
The U.S. Department of Labor regulations raising the required salary level for the white collar exemptions (executive, administrative, and professional) under the Fair Labor Standards Act are scheduled to become effective December 1, 2016. Since the results of Tuesday’s election, some employers are considering whether to delay any scheduled changes in the hope that the Trump administration and the Republican Congress might repeal the regulation. It is unclear at this time whether the Trump administration will make changes to the new rules. Regardless of how the new administration approaches the new regulations, however, there will be a period of time beginning on December 1 during which the $47,476 salary will be the law and an employer may be subject to lawsuits by employees for failing to make the change. To avoid this risk, employers are taking steps to ensure compliance with the new regulations in advance of the December 1 effective date.
If the administration does take action, the regulations might be repealed entirely or “repealed and replaced” (a la Obamacare) with more gradual increases to the salary level and with exemptions for small employers or non-profits. But this is all speculation. If the salary level is lowered in the future, any salary reductions, of course, would create employee-relations issues which may make for a significant deterrent to reducing salaries for current employees whose salaries were previously increased as a result of the new regulations.
Two lawsuits filed in a Texas District Court by several States and various Chambers of Commerce against the Department of Labor seeking to block the rule are also pending. A decision relating to an injunction is likely to occur before the December 1, 2016 effective date. If the lawsuit is successful and an injunction is issued, a Trump administration may decide not to defend the regulation on appeal. Stay tuned for an update following the November 16 hearing.