Stop the Presses! Federal Judge Issues Injunction Blocking DOL’s New Overtime Rule
On November 22, a federal judge in Texas issued a nationwide injunction blocking the U.S. Department of Labor’s (DOL) rule that would have increased the salary threshold for the white-collar overtime exemptions from $455 per week ($23,600 annually) to $913 per week ($47,476 annually). The new regulation was set to take effect December 1, 2016.
U.S. District Judge Amos L. Mazzant ruled that the 21 states and more than 50 business groups that sued to block the rule stood a significant chance of success and would suffer serious financial harm if the rule took effect as scheduled. The DOL overstepped its authority by raising the salary cap that determines which workers must receive overtime pay, according to the court.
The DOL argued it updated the rule to keep up “with our modern economy.” The judge, however, found that increasing the threshold to the 40th percentile of all weekly earnings in the United States effectively eliminated the exemption for “bona fide executive, administrative or professional” employees. The DOL must examine the job duties of employees to determine which workers fit within the exemption. 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 the enforcement of the rule until the DOL can convince an appeals court to overturn the order. It is unlikely that will happen given the conservative makeup of the 5th Circuit, which covers district courts in Texas.
Bottom line: Employers can put a hold on changes that were to be implemented by December 1 and need not take any action. The existing salary threshold of $455 per week will remain in effect until further notice.
This article, slightly modified to note recent updates, was featured in the December 2016 issue of the Wisconsin Employment Law Letter, which is co-edited by Axley Brynelson Attorneys Saul Glazer and Michael Modl and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.