Not So Fast! District Court Blocks Implementation of the DOL’s New Overtime Rule

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As we previously posted on this blog, on May 18, 2016, the United States Department of Labor (“DOL”), issued a final rule (the “Final Rule”) revising the overtime exemption rules of the Fair Labor Standards Act (“FLSA”).  The Final Rule significantly increased the “salary level test” of the FLSA white collar exemptions from $23,660 to $47,476 ($913 per week) annually and included an automatic updating mechanism for the salary level.  The Final Rule was set to go into effect on December 1, 2016.  The future of the Final Rule, however, is now very much in doubt.

On November 22, 2016, a Texas district court issued a nationwide injunction blocking the implementation of the Final Rule, agreeing with 21 states who filed a lawsuit challenging the DOL’s Final Rule.  That lawsuit, which had been consolidated with a similar lawsuit filed by the U.S. Chamber of Commerce and other business groups, challenged the Final Rule as an overreach of the DOL’s rulemaking authority.

In granting the injunction, the district court found that the states established a prima facie case that the increased salary level and automatic updating in the Final Rule were without statutory authority.  The district court also found that the states would suffer irreparable harm through the increased costs the states would incur in complying with the Final Rule.

It is important to keep in mind that the injunction is not a final determination as to the legality of the Final Rule although it does mean that as a practical matter the Final Rule will not go into effect on December 1st.  A final determination concerning the future of the Final Rule must await the conclusion of the lawsuit.

Adding further doubt to the future of the Final Rule is the fact that a new administration is coming into the White House.  As the Final Rule is a creation of the DOL, and not Congress, the new administration can revoke it through agency action, if it so chooses.

We will keep our readers updated as to the status and ultimate outcome of the Final Rule.  For now, there will be no changes to the FLSA regulations come December 1st.

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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