Waiting Game: Future of Proposed "White Collar" Rules Remains Uncertain

There is still no decision on when—or if—the proposed “white collar” regulations will go into effect.  On November 22, 2016, a federal court in Texas issued an order that blocked the U.S. Department of Labor’s (“DOL”) proposed regulations that would have doubled the minimum salary for many “white collar” workers just before the regulations were to go into effect.   As expected, on December 1, 2016, the Department of Justice (then under the President Obama administration), on behalf of the DOL, filed a notice with the U.S. Circuit Court of Appeals for the Fifth Circuit to appeal the order. The DOL sought to fast-track the appeal, asking the Fifth Circuit Court of Appeals for an expedited schedule.  The Fifth Circuit initially granted the request, and issued an order to expedite the legal arguments, with the DOL's reply brief to be filed by February 7, 2017. 

However, on January 25, 2017, shortly after the inauguration of President Trump, the DOL asked the Fifth Circuit for an extension of time to file its legal arguments in order “to allow incoming leadership personnel adequate time to consider the issues.”  The Fifth Circuit ultimately agreed to extend the deadline for the DOL to file its legal argument until May 1, 2017.

It will be interesting to see what position that the DOL will take under the President Trump administration.  President Trump has endeavored to demonstrate that he is an advocate for American workers, while at the same time also espousing a pro-business agenda.  This issue of increasing the minimum salary under the FLSA is one where advocates for workers and business groups have sharply disagreed.  (For example, the AFL-CIO and the Center for American Progress previously argued the increased salary would allow adjustments for inflation, strengthen the middle class, and help Millennials attain financial stability.  On the other hand, business organizations, like the United States Chamber of Commerce and the National Retail Federation, have argued that the proposed regulations would hinder industry and job growth.)  In addition to the possible significant change in the law if the regulations are upheld, how the DOL navigates these differing viewpoints will likely provide important insight into the DOL’s approach to wage issues under the new administration.

New "White Collar" Final Rule Issued; Takes Effect December 1, 2016

Updated, September 19, 2017:  The proposed 2016 "white collar" regulations were struck down in federal court, and never went into effect.


Today, the U.S. Department of Labor issued its much-anticipated final rule changing the regulations for the so-called "white collar” exemptions under the FLSA, and significantly increasing the minimum salary level necessary for employees to be properly classified as exempt executive, administrative, and professional employees.

The final rule and its increased salary requirements will take effect on December 1, 2016. The new regulations will:

• Increase by slightly more than double the minimum salary level for exempt “white collar” employees from $455/week ($23,660/year) to $913/week ($47,476/year);
• Raise the highly compensated employee (“HCE”) threshold from $100,000 to $134,004; and
• Automatically update every three years (1) the minimum salary level to the 40th percentile of full-time salaried workers in the lowest income region of the country; and (2) the HCE threshold to the 90th percentile of full-time salaried workers nationally.

No exception is made for small businesses.  The final rule does not make any changes to the duties tests for executive, administrative and professional employees.  The final rule also allows for up to 10 percent of the minimum salary level for non-HCE employees to be met by non-discretionary bonuses, incentives, or commissions, if these payments are made on at least a quarterly basis.

As a practical matter, these changes to the “white collar” regulations mean higher wages to employees, higher wage costs for employers, and likely increased exposure and risk to employers in wage and hour cases.

A "pre-publication" version of the final rule can be found here.