December 1st Deadline to Comply with the U.S. Department of Labor’s Final Overtime Rule Stalled by Texas Judge

Danielle Barbour Wilson Danielle Wilson, Labor and Employment, Labor Law

employment-law-alert-header-postA federal judge in Texas has entered a preliminary injunction temporarily blocking the final rule regarding overtime published by the U.S. Department of Labor (DOL) on May 23, 2016 (“the Final Rule”). The Final Rule raised the minimum salary for exempt employees from $23,660 to $47,476. While employers were originally required to comply with the new salary threshold (or begin paying employees who make less than $47,476 overtime) starting December 1, 2016, the judge’s ruling has temporarily placed that compliance deadline on hold.

In September, the State of Texas and twenty other states filed a lawsuit challenging the Final Rule. On November 22, 2016, Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas granted a nationwide injunction in light of his conclusion that the Fair Labor Standards Act (FLSA) did not grant the DOL with authority to impose such a significant increase to the salary level, which, according to the court, creates a “de-facto salary only test.” In his opinion, the judge noted that “a preliminary injunction preserves the status quo while the Court determines the [DOL’s] authority to make the Final Rule as well as the Final Rule’s validity.”

Since the injunction is temporary, it is unclear when (and if) employers will have to comply with the Final Rule. Employers who have already made changes to employee compensation and time tracking procedures in anticipation of the December 1st effective date will have to decide whether it makes more business sense to go forward with the planned changes or temporarily place the changes on hold in light of the court’s ruling.

The DOL has issued a statement related to the ruling, which can be found here.