A federal judge in Texas has halted the DOL’s new federal overtime rule, which was scheduled to take effect December 1, 2016 and would have raised the exempt salary threshold from $23,660 to $47,476.
For now, the overtime rule will not take effect as planned December 1, 2016 but may still be implemented at a later date.
Employers may continue to follow the existing overtime regulations until a decision is reached.
Employers Take Note
If you have exempt employees who you were planning to reclassify to nonexempt, but have yet to reclassify, you may want to delay those changes while waiting to see if a new decision is reached. Contact FosterThomas HR to discuss.
Emergency Injunction Granted
The following is an excerpt from our partner BLR’s article ‘Unlawful’ Overtime Rule Temporarily Blocked, written by Kate McGovern Tornone.
At the request of 21 states, the U.S. District Court for the Eastern District of Texas granted an emergency injunction request, halting the regulations that would have required employers to pay overtime to anyone earning less than $913 per week (which amounts to $47,476 annually) beginning December 1.
The plaintiffs alleged in a lawsuit that DOL had overstepped its authority and they requested an emergency injunction, arguing that the public interest necessitated a nationwide preliminary injunction.
Judge Amos Louis Mazzant III, who was nominated to his position by President Obama, agreed. He said it is clear that Congress intended the Fair Labor Standards Act’s (FLSA’s) white-collar exemptions to apply to employees doing actual executive, administrative and professional duties—and not just those who meet a salary requirement.
“With the Final Rule, the Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test. Consequently, the Final Rule … is unlawful,” Mazzant wrote. “If Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change.”
Because he determined the final rule to be unlawful, Mazzant said it was unnecessary to separately address the salary threshold’s automatic increases, which would have upped the threshold every 3 years. It was expected to exceed $51,000 at the first update in 2020. “Because the Final Rule is unlawful, the Court concludes the Department also lacks the authority to implement the automatic updating mechanism,” he said.