Old Overtime Regulations Will Remain in Effect - Federal Judge Issues Preliminary Injunction Blocking New Overtime Regs
November 29, 2016
By: Colin A. Walker
On November 22, 2016, a federal judge in Texas issued a preliminary injunction blocking implementation of the Department of Labor’s new overtime regulations until the case is heard on the merits. The new regulations, if they become effective, would increase the salary threshold for exempt employees from $23,660 to $47,892. The duties test was not changed.
A preliminary injunction preserves the status quo until the case is decided on the merits. The judge revisits the issue at a later stage of the proceedings, usually at trial or, possibly, on a motion for summary judgment (a motion that, if successful, allows a party to prevail before trial). It’s not over yet. The judge will take a harder look at this case later in the proceedings and could allow the new regulations to go into effect.
However, to prevail on a preliminary injunction, the plaintiffs needed to prove, among other things, “a substantial likelihood of success on the merits.” The judge held that the plaintiffs here, 21 states and a group of business organizations, had done so. This may foreshadow how the judge may rule on the merits; he may be reluctant to change his mind.
The court held that the DOL had exceeded its authority under the FLSA by “raising the minimum salary level such that it supplants the duties test.” “Congress intended the EAP [Executive, Administrative, Professional] exemption to depend on an employee’s duties rather than an employee’s salary.” This can be done, the court said, only by Congress, not the DOL.
This ruling seems to call into question the validity of the salary test. However, the Court added in a footnote that it was “not making a general statement of the lawfulness of the salary-level test for the EAP exemption. The Court is evaluating only the salary-level test as amended under the Department’s Final Rule.”
The Court also held that the DOL lacked statutory authority to adopt an “automatic updating mechanism” which would increase the salary threshold every three years.
What It Means For Your Business
The new overtime regulations will NOT go into effect as scheduled on December 1, 2016. The old regulations will remain in effect pending the court’s decision on the merits.
The DOL strongly disagrees with this decision and has stated that it may appeal. However, it is far from clear whether the DOL under the new Administration would file an appeal.
If you have further questions, please contact Colin Walker at email@example.com or (303) 894-4450.