A Texas Federal Judge issued a nationwide injunction temporarily blocking the Department of Labor from enforcing the new minimum salary that must be paid for an employee to be exempt from the overtime pay requirements. The rule which was to take effect on December 1, 2016, would have increased the salary minimum to $47,476.00 annually ($913 per week). TEXAS FEDERAL JUDGE BLOCKS IMPLEMENTATION OF THE SALARY REQUIREMENT FOR OVERTIME EXEMPTIONS will have lasting implications.
The rule will not take effect on December 1, 2016 in light of this injunction. The future of this rule is not clear at this point in time as the judge’s injunction is temporary. As of now, employers do not have to implement this salary increase.
In an article “Texas federal judge blocks DOL overtime rule” By Lisa Milam-Perez, J.D., she says that: In a crucial blow to the Obama administration’s labor and employment legacy, a federal district court in Texas has granted an emergency motion for a preliminary injunction barring the Department of Labor from enforcing its revised overtime rule, scheduled to take effect December 1, pending resolution of a consolidated legal challenge (State of Nevada v. U.S. Department of Labor, November 22, 2016, Mazzant, A.).
The final rule was poised to double the salary level required for employees to be deemed exempt from overtime under the FLSA pursuant to the DOL’s executive, administrative, and professional (“white collar”) exemption. However, a coalition of more than 50 business groups and a separate combined effort by 21 states sued to invalidate the regulation, seeking expedited consideration and emergency injunctive relief. The court, ruling on the state plaintiffs’ injunction request, found they demonstrated a substantial likelihood of success on the merits, as well as the prospect of irreparable harm. A nationwide preliminary injunction preserved the status quo while the court ponders whether the DOL had authority to promulgate the final rule and whether the rule itself was legally viable.
Salary—or duties? The rule’s new salary level of $47,476 (up from the current floor of $23,660) was based upon the 40th percentile of weekly earnings of full-time salaried workers in the lowest wage region of the country (currently the South), and it would have rendered 4.2 million formerly exempt workers now overtime-eligible—with no evident change in the duties they perform. In promulgating the latest iteration of the regulation, the DOL was quite deliberate in not tinkering with the vexing “duties” provisions. The thinking was, if the salary level were set sufficiently high, more employees would be exempt, without first having to scrutinize whether they performed duties that were executive, administrative, or professional in nature. Ultimately, though, that may well prove the DOL’s downfall, as the plaintiffs argued convincingly that Congress intended to exempt employees based on the duties they perform—not the salary they earn.
Automatic update. The DOL added a new provision to its white-collar rule: an automatic updating mechanism, which would adjust the salary floor every three years. The court brushed off the DOL’s contention that any challenge to this provision was not yet ripe for review. Nonetheless, since it found the final rule was likely unlawful already, the court said it didn’t need to tackle the legality of this particular provision. [http://www.employmentlawdaily.com/index.php/news/texas-federal-judge-blocks-dol-overtime-rule/]
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“TEXAS FEDERAL JUDGE BLOCKS IMPLEMENTATION OF THE SALARY REQUIREMENT FOR OVERTIME EXEMPTIONS” was written by Brian Klein and Michael S. Mosscrop.
