Nationwide Injunction Issued Blocking DOL Overtime Final Rule

McAnany, Van Cleave & Phillips

 

Nationwide Injunction Issued Blocking DOL Overtime Final Rule  

 

On November 22, 2016, a federal judge in Texas granted a nationwide preliminary injunction prohibiting the Department of Labor ("DOL") from implementing and enforcing its new overtime regulations that would have significantly increased the minimum salary rate for employees to qualify for the "white collar" exemptions under the Fair Labor Standards Act (FLSA). The new regulations were set to take effect on December 1, 2016. As a result, employers no longer need to implement the changes that would have increased employee salaries of executive, administrative, and professional employees to maintain their exemption from the overtime and minimum wage provisions of the FLSA. The decision applies to pending changes to increase the salary level required to meet the tests for exemption from $455 per week ($23,660 annually) to $913 per week ($47,476 annually).

 

Judge Amos Mazzanti granted the Emergency Motion for Preliminary Injunction filed by 21 states in a suit against the DOL to block the implementation of the DOL Final Rule. Focusing on the statutory language of the FLSA, the court found that Congress intended the white collar exemptions to apply to employees performing actual executive, administrative and professional duties without regard to a minimum salary level. The court ruled the DOL exceeded its delegated authority by raising the minimum salary to a point where it supplants the duties test, and the states would likely prevail on the underlying case. The result, according to the court, is a rule that improperly creates a de facto salary test for determining which workers fall under the FLSA white collar exemptions. The court found that states and employers would likely suffer irreparable harm, the potential injury outweighed any damage to the DOL, and the injunction would not injure public interest. On this basis, the Court found that nationwide injunctive relief was proper to prevent the DOL from implementation and enforcement of the Final Rule pending resolution of the case. 

 

The case is State of Nevada et al. v. United States Dep't of Labor, et al., Case No. 4:16-cv-00731 (E.D. Tex. 2016), originally filed by a group of 21 states in September 2016. A similar suit filed by 50+ business groups has been consolidated with the action.

Although this puts the pending changes on hold, employers must remain prepared and keep tabs on the status of the suit as it is subject to further review and any potential appeals. Employers should also be aware of any pending state law changes unaffected by this ruling on the federal rules.

 

 

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