The U.S. Department of Labor (“DOL”) expanded its overtime rules earlier this year, which included a doubling of the “white collar” salary threshold to $47,476. These new rules survived several bipartisan attempts in Congress to delay implementation and were set to take effect on December 1.
Following this month’s election results, we anticipated that the forthcoming Trump administration, supported by a Republican-majority Congress, would likely seek to roll back the implementation of the rules. Notably, that would have been difficult with the increase in the salary threshold having already been in place for several months. However, yesterday afternoon, U.S. District Judge Amos Mazzant of the Eastern District of Texas entered a nationwide preliminary injunction blocking the DOL implementation of the highly contested rule.
This decision comes as victory to the 21 states and several businesses that earlier sued the federal government, arguing that the DOL’s regulation disregarded the text of the Fair Labor Standards Act by setting a salary threshold without regard to whether an employee is actually performing bona fide executive, administrative, or professional duties, which would exempt those workers from either overtime or minimum wages. Ultimately, Judge Mazzant agreed, finding that the measure improperly created a salary-level test for determining which workers fall under the Fair Labor Standards Act’s “white collar” exemption and holding that this issue should be reserved for Congress.
This is the fourth time in 21 months that a federal judge has issued a nationwide preliminary injunction to block an executive order issued by President Obama. Other shelved initiatives include: shielding undocumented immigrants from deportation, mandating bathroom access for transgender students, and requiring labor-violation disclosures by federal contractors.
Many employers have already provided salary increases to certain employees to bring them above the increased salary threshold. Those who have yet to implement those changes, or who instead made the decision to convert employees to non-exempt status, may delay making any changes and continue following the existing overtime rules until a final decision is reached. While the DOL has indicated that it intends to appeal the decision, such an appeal could be delayed until after the new administration and Congress take office.