Judge Issues Nationwide Temporary Injunction Blocking DOL Overtime Rule
Rule Will Not Go Into Effect Dec. 1
In a ruling that has significant implications for staffing firms, late yesterday a Texas federal judge dealt the U.S. Department of Labor a major setback by preliminary enjoining DOL’s overtime rule which was set to go into effect on Dec. 1. The rule would raise the salary threshold for exempt employees to $47,476. The nationwide injunction means that employers do not have to comply with the rule on Dec. 1.
The lawsuit was brought by state attorneys general and business groups that argued DOL exceeded its statutory authority by drastically raising the salary threshold and automatically adjusting the threshold every three years.
Judge Amos Mazzant, a President Obama appointee, ruled that the plaintiffs were likely to succeed on the merits of the case and would be irreparably harmed absent the injunction. Referring to the duties tests for the executive, administrative, and professional overtime exemptions under the Fair Labor Standards Act, Mazzant wrote that DOL “exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary threshold such that it supplants the duties test.” Thus, he held that DOL’s “increase to the salary level creates essentially a de facto salary-only test,” something only Congress, and not DOL, has the authority to create.
The preliminary injunction is the first step in what likely will be continued litigation, including a possible appeal to the Fifth Circuit Court of Appeals. Such litigation, as well as potential actions by president-elect Trump, Congress, or a new secretary of labor next year, make the rule’s ultimate prospects uncertain. However, yesterday’s ruling means that such prospects may be considerably more dim and, for now, employers do not have to comply with the rule’s salary threshold.
Staffing firms should consult with their attorneys about next steps. For those that have already begun to implement the rule in anticipation of the Dec. 1 date, rolling back such changes could present operational and other challenges. Firms that have not yet implemented changes may consider waiting to do so unless and until a court upholds the rule.