Nationwide Injunction Blocking New Overtime Rules

Stop the Press!  Employers Breathe a Sigh of Relief as Texas Federal Judge Issues Nationwide Injunction Blocking New Overtime Rules Set to Take Effect December 1.

A federal judge in Texas has issued a nationwide injunction blocking the Department of Labor’s (DOL) rule increasing the salary threshold for the white collar overtime exemptions from $455 a week ($23,600 annually) to $913 a week ($47,476 annually).  The new regulations were set to take effect December 1, 2016.

The U.S. District Judge Amos L. Mazzant ruled that the 21 states and 50 + business groups that sued to block the rule stood a significant chance of success and would suffer serious financial harm if the rule was put into effect as scheduled on Dec. 1. The DOL overstepped its authority by raising the salary cap below which all workers must receive overtime pay.

The DOL argued it was updating the rule to keep up “with our modern economy.” The judge, however, found that the increase to the 40th percentile of all weekly earnings in the U.S. effectively eliminated the exception in labor law for “bona fide executive, administrative or professional” employees. The DOL must examine the job duties of employees to determine who fits within the exception. But by raising the salary threshold, “the Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test.”

The injunction halts enforcement of the rule until the DOL can convince an appeals court to overturn the injunction. It is unlikely that will happen given the conservative makeup of the Fifth Circuit Court of Appeals, which covers the District Court in Texas.

Bottom Line: Employers can put on hold any changes which were to be implemented next week and need not take any action.  The existing salary threshold of $455 per week remains in effect until further notice.