November 23, 2016
The new overtime rule, originally set to take effect on December 1, 2016, has been stopped by a Federal Court. In a consolidated case brought by 21 states and the United States Chamber of Commerce against the Department of Labor (the “DOL”), Judge Amos Mazzant of the Eastern District of Texas, Sherman Division, issued a nationwide preliminary injunction yesterday afternoon barring the rule’s implementation. The court found that the DOL in enacting the new salary threshold requirement of $921 per week—more than double the current amount of $455 per week—“exceeded its delegated authority and ignore[d] Congress’s intent … such that it supplants the duties test.” The Court also found that the Final Rule did not pass even the first step of the applicable analysis because the rule was not based on a permissible construction of the plain language of the Fair Labors Standard Act (“FLSA”) which intended only those who were executives, administrators, or professionals to be exempt irrespective of their salary.
For employers, this preliminary injunction preserves the status quo while the court determines two separate issues: (1) the DOL’s authority to make the Final Rule ; and (2) the validity of the Final Rule. This simply means:
-No change to the current overtime rule will be implemented on December 1, 2016;
-This issue will remain before Judge Mazzant for further proceedings;
-The DOL under the current President will likely challenge this ruling;
-What the DOL will do under President-elect Trump is unknown at this time.
This issue will likely remain unresolved until well into 2017.For more information on how this ruling affects your business, please feel free to contact us.