DOL’S NEW OVERTIME RULE STOPPED IN ITS TRACKS

Overtime Rule Injunction copy

A federal court in Texas decided just this week to halt the implementation of the U.S. Department of Labor's (DOL) new overtime rule, which was set for December 1, 2016. The court issued a nationwide preliminary injunction after 21 states and a coalition of business groups challenged the rule, thereby stopping the new rule in its tracks. This is a significant ruling for employers who have been preparing for months to be in compliance with the new rule by December 1st.

I discussed the rule in a previous blog post that you can read HERE. In short, the rule increases the threshold salary level for white collar employees to be exempt from overtime pay from $23,660 annually ($455 weekly) to $47,476 annually ($913 weekly), and the amount of this salary limit automatically increases every 3 years. By increasing the threshold, over 4 million workers who are currently ineligible for overtime pay under the Fair Labor Standards Act would become eligible.

The court was persuaded by the states' and businesses' argument that the DOL had exceeded its authority in raising the salary limit so significantly. The court reasoned that, under the law, the DOL had the authority to regulate employees' eligibility for overtime pay based on the types of duties they performed, but not based on a salary limit.

This is not a final decision on the matter. The DOL will likely appeal the court's decision, but, even if it does not, the court must still consider the case on its merits. The preliminary injunction, then, may turn out only to delay the implementation of the overtime rule.

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