Previously, on May 23, 2016, the Department of Labor (“DOL”) published a “Final Rule” which increased the minimum salary level a ‘white collar’ employee must be paid to be exempt from the overtime pay rules of the Fair Labor Standards Act (“FLSA”). Under the new rule, the minimum salary for an “executive, administrative, or professional” employee to be exempt was raised from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). A Court injunction prevented this rule from going into effect on December 1, 2016.

On August 31, 2017, the U.S. District Court, Eastern District of Texas struck down the new rule but upheld use of the salary-level test by the DOL. The Court reasoned that significant minimum salary level increase was not a reasonable interpretation of Congress’s intent under the FLSA because it made an employee’s employment overtime status depend predominately on minimum salary level, rather than the employee’s duties.
Conclusion

The above ruling occurred in the Fifth Circuit and is not binding in Michigan. However, the DOL has indicated it will modify its new rule to include a lower salary level threshold. Until this rulemaking process is completed and the courts have reviewed the new rule, our recommendation remains that dealers continue to use the salary levels they were using prior to May, 2016.

If you have any questions or concerns about this or any other employment matters, please do not hesitate to contact a member of the Dealer Practice Group at 248-645-9300 or by email.

Chuck LeFevre, Chair – [email protected]
Lawrence F. Raniszeski – [email protected]
Michael J. O’Shaughnessy – [email protected]
Eric R. Bowden – [email protected]
Alycia Pallach Wesley – [email protected]
Nicholas J. Ranke – [email protected]