Late yesterday, a Texas federal Judge blocked the U.S.
Department of Labor’s (USDOL’s) overtime rule from taking effect on December 1,
2016. The revised regulations were introduced in May and altered the minimum
salary threshold used in determining “White Collar Exemptions” under the
federal Fair Labor Standards Act (FLSA).
The minimum salary was increased from $455 to $913 per week and set to
update every three years, with the first update scheduled in January 2020.
Twenty-one states and multiple business associations filed
lawsuits seeking a court order to block the rule from going into effect. The
cases were consolidated into one action, claiming that the USDOL did not take
into consideration job duties as the best indicator to determine whether
threshold increases were needed, and automatic indexing every three years was
improper as it ignored economic conditions and the effect on public and private
resources.
District Court Judge Amos Mazzant agreed and blocked
implementation of the rule. The court held that the USDOL exceeded its
authority when implementing the changes. By significantly increasing the
minimum salary threshold, the court said that the USDOL “essentially eliminated
all the remaining requirements.” The new
threshold would allow a worker overtime eligibility without regard to actual
duties performed. In his ruling, Judge Mazzant stated that it was improper for
the USDOL to adopt a salary test that categorically excludes a substantial
number of workers that meet the duties-related requirement.
Although the ruling does not overturn the new regulations,
it does stall implementation until further review. If the USDOL decides to
appeal the ruling, the process could take several months. It is uncertain what
the future holds for The Overtime Rule, assuming that the injunction holds
until President–Elect Donald Trump takes office in January 2017. Many employers
have already implemented exemption related changes. However, employers that
were waiting until December 1st to implement have the option to hold
off on any alterations until a final ruling is in place.
