On November 22, 2016, in a surprise opinion, a Texas Judge granted a nationwide preliminary injunction halting the Department of Labor’s Final Rule on Overtime Exemptions that was set to take effect on December 1, 2016.
The Judge held that the Department of Labor had no authority to set the salary threshold at $913.00 per week and that by raising it to that amount, the Final Rule creates a “de facto salary-only test,” and ignores the duties test. The Court further held that the Department of Labor did not have the authority to implement the three (3) year automatic updating mechanism.
A preliminary injunction only preserves the status quo while the Court determines the Department of Labor’s authority to issue the Final Rule as well as the Final Rule’s validity. This ruling simply halts the December 1st effective date. Given the Judge’s ruling and the results of the Presidential Election, the fate of this Final Rule remains uncertain.
Unfortunately for employers, this temporary injunction further complicates the road to compliance with the Final Rule. Employers are now faced with whether to proceed to implementation or await any future verdict regarding overtime exemptions. Other factors to consider are the possibility that the new Administration and/or Congress will take action to reverse or modify the Final Rule. Additionally, in the event that the injunction is overturned and the government would prevail, the December 1, 2016 effective date may be retroactively enforced.
See our previous column, “Are you prepared for rule changes affecting how you pay your employees?” for more information about the Final Rule: https://www.employshare.com/rule-changes-affecting-paid-employees/
As with this surprise ruling, it is impossible to anticipate or predict how this will play out. We are tracking this litigation and will keep you apprised of any new developments. If you have questions or concerns, contact Dan D’Alio at ddalio@employshare.com or (330)-856-9770. We’re here to help.
