By: Barry Dorans
On June 7, 2017, attorneys for employees of Chipotle filed suit in a U.S. District Court seeking overtime for any employee who worked for Chipotle and was paid a salary of less than $47,476 from December 1, 2016 to the present. There is some confusion among employers about this, but employers need to be aware of the exact status of the law.
To be exempt from overtime, an employee’s primary duty must fit within a particular classification and they must be paid a minimum salary. Historically, the minimum salary was $23,660 ($455 per week). The Department of Labor issued a regulation which would have increased the minimum salary to $47,476 per year ($913 per week), effective December 1, 2016. Prior to the date that regulation went into effect, a Texas U.S. District Court entered a temporary injunction preventing the Department of Labor from enforcing the regulation anywhere in the United States. As I have discussed in presentations, that temporary injunction is: a) temporary; and b) only applies to the Department of Labor. That leaves the possibility that the injunction can be dissolved or that private lawyers will sue employers claiming the injunction applies only to the Department of Labor.
The attorneys for employees of Chipotle claim that while the injunction prevents the Department of Labor from enforcing the rule, the regulation has been issued and employers must comply with it. The employees are seeking overtime, plus liquidated damages of 100% of the overtime, plus attorney’s fees for each of the employees who were allegedly underpaid.
Accordingly, it is important for employers to check with their counsel to make sure that they are adequately managing this risk. Employers need to be cautious in their treatment of white collar exempt employees since there has been no final decision on whether the regulation is valid or enforceable and should consider options to minimize an adverse outcome.
Note that the temporary injunction has been appealed and the Department of Labor has asked for an extension until June 30, 2017 to file any briefs on the appeal. However, even if the appeal is withdrawn, that does not resolve the issue of whether private attorneys can sue on behalf of their employees and thus employers must tread carefully.
If you have any further questions, please do not hesitate to contact me.
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