On November 22, 2016, a federal judge in Texas issued an injunction that will prevent the United States Department of Labor’s new overtime regulations from taking effect on December 1, 2016. The DOL issued its Final Rule in May of this year. The final rule would have required employers to pay employees at least $913 per week ($47,476 annualized) to satisfy the salary test for white collar exemptions.
The Rule was scheduled to go into effect December 1. In September of this year, a group of 21 states filed a lawsuit in federal court challenging the Department of Labor’s Final Rule. The district judge hearing the case granted the States’ motion for a preliminary injunction, enjoining the Rule from going into effect. The court held that Congress defined the executive, administrative, and professional exemption only with regard to duties and did not include a minimum salary requirement. The DOL’s Final Rule essentially created a “de facto salary-only test” by making millions of workers eligible for overtime even though their duties might qualify them for the exemption. Ultimately the court found the Rule “exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test.”
The DOL may decide to appeal the decision to the Fifth Circuit Court of Appeals. In an issued statement, the Department said, “we are currently considering all of our legal options.” Whether the Final Rule ever takes effect depends on a combination of whether the DOL appeals the decision, the outcome of that appeal, and the actions of a new Congress and a new president next year.
Poyner Spruill will continue to follow this case and provide updates. Please contact us if you have specific questions about the decision’s effect on your business.