Don’t Mess with Texas (Judges)

It has been a rough couple of weeks for the Department of Labor.  First, a federal court in Texas permanently blocked the DOL’s amended “Persuader Rules,” which would have required employers to report payments to consultants, including lawyers, for certain labor law work.

Then yesterday, with just a little more than one week before it would otherwise be implemented, another federal judge in Texas put a temporary halt to the U.S. Department of Labor’s updated salary test rules.

The rules, set to more than double the minimum weekly salary to $913 weekly (approximately $47,476 annually) from $455 weekly (approximately $23,660), had faced push-back from employer groups from the start.  Many claimed the salary increase was too much too fast, and others claimed the rule change exceeded the Department of Labor’s authority. In particular, retail and nonprofit employers really felt the crunch with the new salary test, as pay rates for many leaders in these industries fell near or under the proposed increase.

Notably, with the December 1 effective date approaching, most employers have buried their heads in the sand around this issue already analyzed their workforce and, due to upcoming payroll cycles, already implemented payroll and employee classification changes to bring workplaces into compliance. If you are one of these employers, then you have some choices ahead of you.  Many employers endured a large amount of organizational communication and employee relations work leading up to this change, and it may do more harm than good to reverse those changes just to have the DOL rules potentially reinstated in the future. Not to mention morale issues for any employees who received a raise to put them above the salary test, only to have that taken away going into the holiday season. That said, if you would like to “undo” what you had done, there is no prohibition on doing so.

For those workplaces that were dragging their feet – wipe that smug grin off your face; you are not in the clear yet.  The federal judge’s ruling simply places a temporary injunction on the rule.  This means that the current rules (aka: $455/week) are being preserved while the new rules ($913/week) are being examined.  It is still unclear if the rules will be permanently blocked, modified, or rescinded.  If you have not yet implemented changes (or if you have been banking on something like an injunction to prevent you from having to implement changes), you are safe to hold off on this…for now.  What will happen next remains unsettled, but compliance by next week is currently not required.

As we count down the hours to Thanksgiving, I hope you all have a great holiday with family (or friends that are like family).  However you choose to spend the day, I think we can all be thankful that we are not the Department of Labor right now.