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Posted on Monday, November 28, 2016

New Overtime Changes on Hold… For Now

Less than two weeks before the Department of Labor’s new federal overtime rule was scheduled to take effect on December 1, a federal judge in Texas issued a nationwide preliminary injunction postponing its implementation. The new rule would have raised the minimum salary threshold to qualify for overtime pay under the Fair Labor Standard Act’s white collar exemption from $23,660 to $47,476 per year, with automatic adjustments to the threshold every three years going forward.In his ruling granting the preliminary injunction, U.S. District Judge Mazzant stated, “Congress defined the [white collar] exemption with regard to duties, which does not include a minimum salary level.” He found that, “[w]ith 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.”

Following this ruling, the overtime rule will not take effect on as scheduled and employers may continue to follow the existing overtime regulations until a final decision is reached by the court. Because a preliminary injunction is not permanent, it is possible that the rule will be implemented at a later date. However, the judge could not have issued a preliminary injunction without determining that the states had established a substantial of likelihood of succeeding on their claims.

We are monitoring this matter closely. Please feel free to contact our attorneys for further guidance or analysis.

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