On November 22, a federal district court judge in Texas issued a temporary injunction that prevents the Department of Labor’s overtime rule from going into effect nationally. The overtime rule would have raised the minimum yearly salary to qualify under the Fair Labor Standards Act’s (FLSA) white collar exemptions from $23,660 to $47,476. For an employee to be exempt from the FLSA’s overtime requirement under these exemptions, an employee must be paid this minimum salary level and have the duties of a white collar employee.
The new overtime rule was set to go into effect December 1, 2016, but the judge’s ruling prevents the rule’s implementation nationwide. The court stated that the Department of Labor went beyond the power Congress delegated to it by imposing this higher salary level that effectively supplants the duties test. The judge’s reasoning called into question whether the salary basis test will be required in the future, but he specifically limited his analysis to the salary basis test as amended by the overtime rule. For the time being, this injunction allows employers to maintain their existing designations of certain white collar employees as exempt without meeting the new salary requirements.
It is unclear whether the overtime rule will ever be effective. The Department of Labor has the ability to appeal this decision immediately to the Fifth Circuit Court of Appeals. The Supreme Court could review this decision regardless of how the Fifth Circuit rules. Additionally, the incoming administration will have a say on this issue, but it is unclear whether that decision will be to defend, delay, or abandon the overtime rule. We will be monitoring this case for further developments.
If you have any questions about how to respond to this ruling, please contact one of Conn Kavanaugh’s employment lawyers for assistance.