Federal Judge Temporarily Blocks New Overtime Law

On November 23, 2016, a federal Judge in Texas issued an order temporarily barring the Department of Labor (“DOL”) from enforcing its much-publicized new overtime rule, just over one week before the rule’s December 1 effective date.

As explained HERE, the new rule would have represented a landmark change to the overtime rules under the Fair Labor Standards Act (“FLSA”), by more than doubling the minimum annual salary threshold for the FLSA’s “white collar” executive, administrative and professional exemptions.  By raising the threshold from $23,660 to $47,476 per year, the DOL estimated that approximately 4 million workers would have become immediately eligible to earn overtime premium pay or have their salaries raised to the new threshold. The new rule would also have automatically increased the new minimum salary threshold every three years, starting on January 1, 2020, to keep pace with inflation.

To prevent these sweeping changes from taking effect, twenty-one states and fifty businesses filed cases in the U.S. District Court for the Eastern District of Texas.  In their case, the states moved for a preliminary injunction on the grounds that the DOL exceeded its authority in promulgating the new rule on several statutory and constitutional grounds.  The business organizations were also permitted to present certain of their arguments in supporting the states’ motion for a preliminary injunction.

The Court ultimately sided with the states, finding (among other grounds) that the rule was unlawful because it emphasized the salary component of the exemption test rather than an employee’s actual duties.

Given the changes to the federal government that will take place in January, this ruling likely places the future of the new FLSA rules in serious jeopardy.