A federal judge in Texas on Tuesday granted a nationwide preliminary injunction delaying the new DOL overtime rule scheduled to take effect on December 1.
What Just Happened?
Effective December 1, the DOL rule would have increased the salary required for “white collar” overtime exemption from $455 per week ($23,660 for a full-year worker) to $913 per week ($47,476 for a full-year worker). In mid-October, twenty-one states filed a lawsuit in the U.S. District Court for the Eastern District of Texas, asking the court to issue a preliminary injunction that, if granted, would stop the DOL from implementing the new rule. More than 50 business groups, including the U.S. Chamber of Commerce, filed a separate but coordinated legal challenge to the new rules in the same court. Yesterday – two days before Thanksgiving and only five business days before the rule was scheduled to take effect – the Texas court granted the request for a preliminary injunction, delaying implementation of the new federal salary requirement nationwide at least until the decision is reviewed on an appeal to the U.S. Court of Appeals for the Fifth Circuit.
What Does This Mean?
As a result of the Texas court’s ruling, the minimum salary required for “white collar” overtime exemption under the federal rules will remain at $455 per week ($23,660 for a full-year worker), at least for now. Employers now no longer need to implement salary increases or reclassifications to comply with the new federal rule by December 1.
How Should Employers Respond?
The preliminary injunction injects enormous uncertainty about the future of the new rule on the very eve of the implementation deadline. Some employers will learn of the injunction within the same payroll cycle when they may have already scheduled to implement changes required under the new rule. The preliminary injunction can be overturned on appeal, but the timing and outcome of an appeal are unknown, and it is possible that the preliminary injunction could delay implementation until January, creating an opening for the new Republican Congress to pass legislation delaying the rule without threat of veto by the Obama Administration.