Judge Suspends Rule Expanding Overtime

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.
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