On November 22, 2016, a federal court in Texas issued an order granting a nationwide preliminary injunction prohibiting implementation of the Department of Labor’s (the “DOL”) new overtime rules, which were scheduled to take effect December 1, 2016 and would affect approximately 4.2 million workers nationwide.
As addressed in our prior article, the DOL finalized updates to the overtime regulations under the Fair Labor Standards Act (“FLSA”) in May this year. The DOL made changes intended to “extend” overtime protections to employees currently treated as exempt from overtime pay under the “White Collar” exemptions (i.e., executive, administrative and professional). This included raising the minimum salary level required to qualify for these exemptions from $455/week ($23,660/year) to $913/week ($47,476/year), with an automatic update every three years.
With the December 1, 2016 deadline looming, 21 states and dozens of business groups, including the U.S. Chamber of Commerce, opposed the new overtime rules and filed suit in federal court in Texas. They asked the court to enjoin, or stop, implementation of the rules on December 1, 2016. The court granted the motion for preliminary injunction on November 22, 2016 and found that the new overtime rules violated Congressional intent and exceeded the scope of DOL’s authority under FLSA. Though temporary, the order effectively blocks the implementation of the new overtime rules until the court issues a final judgment in the case.
The preliminary injunction along with the changing political landscape leaves the status of the new DOL overtime rules in question. For now, the new rules are delayed until further action is taken by the court or Congress; however, prudence suggests that employers should still be prepared for the new rules to take place. Entry of the injunction provides additional time for employers to prepare, but it also requires employers who have already announced changes to comply with the anticipated rule change to consider the potential impact of the delay on their employees.
If you have questions, please contact Dean Mead’s Employment Law Team.
Dean Mead’s Employment Law Team stands ready to assist you with questions on what your business should be doing in light of the order delaying implementation of the new DOL rules. Given the significance and complexity of these regulations, you will benefit from the assistance of our Team in ensuring you meet all criteria and stay up-to-date with the status of the new DOL rules. Indeed, employment rules are complex and the potential financial impact of mistakes, particularly with overtime, is high. While legal assistance is particularly helpful in navigating these uncharted waters, the DOL’s numerous FAQs and assistance manuals available at dol.gov may also provide guidance. Putting the necessary resources into managing your workforce the right way will save time and money in the long-run. Our attorneys are prepared to work with you and your business to map out your plan for continued future success.