Just before Thanksgiving, a Texas federal court judge issued an injunction blocking the closely-watched new federal overtime rule from taking effect as scheduled on December 1, 2016. As expected, the DOL is not going quietly into the night and the parties have engaged in a flurry of court filings as the fight, at least in part, concerning whether the new rule is lawful shifts to the United States Court of Appeals for the Fifth Circuit.
On the day that the overtime rule was slated to go into effect, and nine days after the injunction was issued, the DOL filed its notice of appeal in the United States Court of Appeals for the Fifth Circuit. The next day, December 2, the DOL requested that the court hear the appeal on an expedited basis. From start to finish, it is not uncommon for appeals to stay pending for many months, even years in extreme cases, but the DOL requested that its appeal be briefed in a little over three months, and scheduled for oral argument in open court “for the first available date after close of briefing.”
The appeals court granted the DOL’s request, ordering a quicker timeline than what the DOL even requested. In fact, the DOL has already filed its brief, and all briefing in the appeal will conclude by month’s end. Should the appeals court side with the DOL, and find the new rule to be lawful, the preliminary injunction and any other order from the Texas court in conflict with the appeals court (see below) would no longer be in effect.
Importantly, earlier this week on January 3, the Texas federal court denied the DOL’s motion to stay all proceedings while the appeal was pending. The November injunction was a “preliminary injunction;” it did not end the case at that court. The parties challenging the DOL rule first requested, and received, a preliminary injunction because they filed their case only a few months before the rule’s December 1 effective date, but they are also requesting that the injunction become permanent (i.e. the new overtime rule never goes into effect). Given this week’s decision, the Texas federal court can rule on that request at any time despite the appeal’s pendency.
The bottom line is that, as of today, the DOL’s new overtime rules are not in effect. Consistent with our earlier post, employers should seek legal guidance as to best practices moving forward. Employers who raised salaries in anticipation of the injunction can revisit those increases to the extent it makes sense to do so, or they can continue to wait for further guidance from the courts. Employers who did nothing in anticipation of the rule change should continue to wait. Changes could happen as early as this spring due to the expedited time table of the DOL’s appeal of the November preliminary injunction. It’s also possible that the Texas federal court could issue another order and further complicate the appeal. Employers should also watch to see the incoming President Trump administration’s view on the overtime rule. If the appeals court finds the rule lawful, President Trump would not be able to, by himself, simply repeal the new rule. Instead, his administration could: (1) propose new rules and follow the same long process that resulted in the new overtime rule; or (2) work with congressional Republicans to make changes to the new rule. We will continue to post on these developments.