November 23, 2016

Federal Court Blocks New Overtime Regulation

Written By

Thomas M. Williams
Member, Stoll Keenon Ogden PLLC

New minimum salary level will not be implemented December 1

On November 22, a federal judge in Texas issued a nationwide preliminary injunction blocking the U.S. Department of Labor’s planned regulatory change to the “white collar” overtime exemptions.

The new rule, which was set to take effect December 1, would have doubled the “minimum salary level” required for an executive, administrative or professional exemption from the Fair Labor Standards Act’s overtime requirements, and established an automatic increase in this minimum salary level in future years.  

In a 21-page opinion, Judge Amos Mazzant found that the plaintiffs – 21 states and a number of chambers of commerce – had demonstrated a strong likelihood they would eventually prevail on the merits of their legal challenge to the rule. 

The plaintiffs had argued that the Department of Labor’s new rule attempted to rewrite the exemptions created by Congress by using an unreasonably high salary test to effectively eliminate the overtime exemption for millions of otherwise bona fide executive, administrative and professional workers.

Judge Mazzant further held that without an injunction, the plaintiffs would be irreparably harmed and the public would be best served by an order preserving the status quo while a final decision on the rule’s legality could be reached.

This injunction, while preliminary, likely signals the permanent demise of the new overtime rule, as the incoming Trump Administration is unlikely to appeal or otherwise revive this regulation. Employers should keep a close eye on the news, however.

If you have questions about how this ruling affects your business, please do not hesitate to contact a member of SKO’s Labor, Employment and Employee Benefits team.

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