In what can only be described as a surprising last minute development, a federal judge in Texas has issued a nationwide preliminary injunction preventing the implementation of the Department of Labor’s overtime rule that would raise the salary threshold applicable to the “white collar” exemptions from $23,660 to $47,476, and that would automatically increase this threshold every three years. This rule was to take effect on December 1, 2016. While coming late in the game, this decision is welcome news for employers who have been scrambling to bring themselves into compliance with the now enjoined rule.
The suit was originally brought by twenty-one states and was consolidated with a similar suit filed by the U.S. Chamber of Commerce and other business groups. They argued that the DOL exceeded its authority by raising the salary threshold too high and by providing for automatic triennial adjustments to the minimum salary threshold.
In order to fall under a “white collar” exemption and not be entitled to overtime, an employee must be engaged in executive, administrative or professional duties (“duties test”) and must also meet a minimum salary threshold (“salary test”). In agreeing with the states and business groups that brought the suit, the Texas district court judge rationalized that by more than doubling the minimum salary threshold, the DOL effectively supplanted the duties test and created a “de facto salary-only test.”
While the DOL has already said it will appeal the court’s decision, for now employers should continue to follow the existing overtime regulations. And, with the Trump administration taking over in January, 2017 it remains to be seen whether these rules will ever take effect.
Click here to view the court's decision.