DOL overtime regulations stopped by temporary injunction

The Department of Labor’s exempt employee overtime regulation, that would have become effective on December 1, 2016, has been enjoined nationwide by a federal district court in Texas. The judge granted the injunction on November 22, and with the change in administrations in January, it is unlikely that the new head of the DOL will appeal the ruling.

The regulation would have forced employers with exempt employees who worked more than 40 hours per week to pay them overtime for those hours or to raise their base salary to $913 per week. The lawsuit was brought by 21 states who would have had to cope with substantial increases in payroll expenses if the final rule had gone into effect.

The judge granted the preliminary injunction because he accepted the plaintiff’s argument that the “white collar” exemption under the Fair Labor Standards Act (FLSA) should be applied to workers engage in executive, administrative or professional duties, irrespective of their salary.

The preliminary injunction will likely become a de facto permanent injunction, as the current administration would have little time to prepare an appeal before the new administration is installed next year. In addition, the appeal from the district court would be heard by the Fifth Circuit, one of the more employer-friendly appeals courts.

This will remove one employment law wild card for employers who would have had to deal with the implementation of the new rules and the potential for further changes in the future as the new administration would likely have made an effort to roll back the salary increase. As it is now, the status quo salary limit will remain at the 2004 level of $23,660.