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Rule May Never Be Implemented

While we all were busy, getting ready for turkey dinner with families and friends, a federal judge in Texas was busy considering whether the Department of Labor could impose any minimum salary test for exempt employees or whether the Fair Labor Standards Act’s silence on the issue precludes the DOL from imposing any minimum salary (much less the $47,476 per year scheduled to go into effect December 1st). His conclusion on November 23rd: The DOL has no such power.

There were several arguments proffered in the consolidated cases heard in Texas, and the judge ruled based on the most expansive and potentially far-reaching. The DOL has had a “salary test” in effect for a long time (but we didn’t pay much attention to it in California because it was so low). The judge’s ruling here, if it is appealed (likely) and sustained (your guess is as good as mine and may depend on which administration is making the decisions about appeal), such a narrow view of the DOL’s rulemaking power has implications not only for this rule, but will be precedent for nearly every challenge of Executive Branch rulemaking in the future.

Now what? For California employers, exempt employees are still subject to this state’s narrower “duties test,” plus the “twice minimum wage” salary test, so things go back to where they were before the DOL Final Rule was adopted for now. As long as your exempt employees are earning at least $41,600, (and, of course, spend 50% or more of their time performing exempt duties) then raises or other changes are not necessary to implement by December 1.

Questions about exempt status in California? Call us:
(805) 225-1773

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