Implementation of New Overtime Rules Delayed

November 28, 2016

By: Kimberly Klein

A federal Texas judge has granted a nationwide injunction blocking the new overtime rules promulgated by the U.S. Department of Labor (“DOL”) from being implemented.  The new rules, which would have more than doubled the annual salary required for an employee to be exempt from overtime, were set to go into effect December 1, 2016.  See our article, Many Exempt Workers Will Now Be Eligible to Receive Overtime As a Result of a New DOL Rule from May 2016.

The lawsuit was brought by 21 states claiming they would be irreparable harmed if the minimum salary threshold for the white collar exemptions was raised from $23,660 per year to $47,476 per year.  In siding with the states, U.S. District Judge Amos Mazzant held that “[t]he state plaintiffs have established a prima facie case that the Department’s salary level under the final rule and the automatic updating mechanism are without statutory authority.”  The suit had been consolidated with a similar challenge by the U.S. Chamber of Commerce and other business groups. 

The states argued that the changes in the law would substantially increase employer costs and focused on the salary threshold, not whether the employees were performing exempt functions.  Judge Mazzant agreed stating that Congress, not the DOL, should change the salary threshold.  The main white collar exemptions include executive, administrative and professional.

It is unclear whether the DOL will seek an emergency appeal of the injunction.  The agency said in a statement that it “strongly” disagrees with the decision, is considering all of its legal options and remains “confident in the legality of all aspects of the rule.”  In the statement, the DOL went on to say that the decision “has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans.”

Employers that were in the process of implementing changes to be compliant with the new Rule must now decide whether to go ahead with those changes or hold off until the matter works its way through the court system.  To discuss compliance concerns, please contact Kimberly Klein at 212-554-7853 or kklein@mosessinger.com.

PDF File View as PDF