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11/23/2016

Federal court halts DOL’s new white collar regulation

by T. Scott Gilligan, OFDA legal counsel

In a stunning development, a federal district court in Texas has issued a preliminary injunction stopping the Department of Labor’s (DOL) new white collar regulation from taking effect on December 1, 2016.  While the injunction is temporary and can be overturned by an appellate court, many observers believe that the ruling, coupled with the change from an Obama to a Trump administration in late January, may be the death knell for the DOL’s regulation.

 

For most of 2016, OFDA members have been preparing for the impact of the new regulation that would have drastically increased the minimum salary level for employees to qualify for the white collar exemption.  Employees who meet the classification of the white collar exemption are not entitled to overtime pay since they are on a straight salary.  To qualify for the exemption, an employee must not only have to meet the definition of an executive, high level administrator, or professional, but they also had to be paid a minimum salary.  Currently, that minimum salary is only $23,660, but it would be increased to $47,476 under the updated white collar regulations that the DOL had scheduled to take effect on December 1, 2016.

 

A mere eight days before the December 1, 2016 effective date, Judge Amos Mazzant, an Obama appointed judge in the Federal Eastern District of Texas, surprised many by ruling that the DOL lacks the authority to set a minimum salary for the white collar exemption.  The Judge opined that while Congress did give the DOL the authority to establish who qualifies as an executive, administrator, or a professional, it did not give the DOL the power to set minimum salaries as part of that definition.  As part of his ruling, he held that the regulation should not take effect anywhere in the United States until the matter can be fully heard by the court.

 

While Judge Mazzant’s ruling is preliminary, it is highly doubtful that he will reverse it.  Moreover, if it is appealed to the Federal Court of Appeals, it would be heard by the Fifth Circuit which is very conservative and probably would uphold it.  Additionally, with the Trump administration scheduled to take over the executive branch in late January, there is a considerable possibility that the Department of Justice may choose not to appeal any adverse ruling and simply let the invalidation of the DOL regulation stand.  Therefore, while we do not know for certain that the DOL White Collar regulation is dead, it is safe to say that it is on life support.

 

What does this mean for Ohio’s funeral homes?  Basically, it means that everything is back to the way it was prior to the issuance of the proposed regulation by the DOL.  Funeral directors and embalmers working and licensed in Ohio are considered to be “professionals” under DOL regulations, and therefore, are covered by the white collar exemption.  The minimum salary level has been declared invalid by the district judge on a preliminary basis, but there are strong reasons to believe that the ruling will ultimately stand.  Of course, OFDA will provide updates on any new developments.  But for now, no changes are required in employee compensation methods.

 

OFDA members with questions regarding this article may contact Scott Gilligan at (513) 871-6332.