Yesterday, November 22, 2016, a federal judge in the Eastern District of Texas issued a nationwide preliminary injunction, blocking the Obama administration’s new overtime rules from going into effect.
On May 18, 2016, the Department of Labor issued its final ruling on the proposed overtime changes to the Fair Labor Standards Act. Under the new law, the salary threshold for white collar exempt status was raised from $455 per week to $913 per week, or from a yearly salary of $23,660 to $47,476. There were no changes to the duties test under these exemptions. These changes were supposed to go into effect on December 1, 2016.
Since the announcement of these new overtime rules, twenty-one states filed an emergency motion for a preliminary injunction to halt the new rule, arguing that the issuance of this new rule exceeded the authority of the Department of Labor.
So what does this mean? Basically, the status quo remains for now. The new rules will not go into effect on December 1, 2016, so long as this preliminary injunction remains in effect. However, a preliminary injunction is not permanent and the court will still review the merits of the case and make a final determination. Additionally, if the court does in fact rule against the Department of Labor, it is very likely that an appeal will be taken. Unfortunately, this may lead to lots of uncertainties for businesses trying to comply with federal overtime laws. In addition to these rules being challenged in court, there are media reports that House Republicans are eyeing these new overtime rules as part of a number of regulations they believe they can repeal. In effect, regardless of how the court rules on this matter, the new rules could be repealed sometime next year.
If you have any questions or concerns about compliance with the overtime provisions of the Fair Labor Standards Act, please do not hesitate to call or email me.