By Many human resource professionals got into the office today not knowing whether to laugh or cry. Most are happy that the Department of Labor’s (DOL’s) new overtime salary requirement will not go into effect next Thursday, December 1, 2016, due to a federal judge’s grant of a nationwide preliminary injunction which prevents the DOL from implementing and enforcing the new rule. (See our post yesterday reporting on the injunction.) Yet, many organizations have already spent countless hours preparing for the new rule to go into effect next week and are wondering what to do now. Let’s review where things stand and your best options going forward.
Nationwide Injunction Delays Final Overtime Rule
In September, twenty-one states sued the DOL in federal court in Texas seeking to stop the DOL’s final rule that more than doubles the salary threshold for the so-called white collar exemptions and calls for automatic increases every three years. Business groups and industry associations also filed suit in the same Texas court seeking a similar outcome. The state-plaintiffs filed an emergency motion for a preliminary injunction. Shortly thereafter, the business-plaintiffs filed an expedited motion for summary judgment. The two cases were consolidated under Judge Amos L. Mazzant, III.
On November 16, 2016, Judge Mazzant heard oral argument on the state-plaintiffs’ emergency preliminary injunction motion. He issued his ruling yesterday, granting the preliminary injunction on a nationwide basis.
To prevail on their preliminary injunction motion, the states needed to show, among other things, that they would have a substantial likelihood of success on the merits of their case. The court ruled that the states met that burden, finding that the plain meaning of the executive, administrative, and professional exemptions in the Fair Labor Standards Act (FLSA) focused only on the duties of such positions, without a minimum salary level. The court stated that although the FLSA delegated authority to the DOL to establish the types of duties that might qualify an employee for these exemptions, it did not authorize the Department to disqualify employees who meet the duties requirements but do not meet the salary level established in the DOL’s final rule. The court concluded that the DOL exceeded its delegated authority and ignored Congress’s intent by raising the minimum salary level so that it “supplants the duties test.”
Anticipating The Next Legal Move
The preliminary injunction is only the first step in this legal challenge to the DOL’s final overtime rule, but it provides a huge blow to the Obama administration’s efforts to raise wages for U.S. workers. The DOL could appeal the court’s ruling to the Fifth Circuit Court of Appeals, but according to a DOL statement, the agency is still “considering all of [its] legal options.” Whether an appeal would be successful is unknown. Absent an appeal, the Texas lawsuits continue, with a permanent resolution still to be decided. Read more