November 28, 2016
Preliminary Injunction Places Temporary Hold on New Overtime Rules
On November 22, 2016, Federal District Court Judge Amos Mazzant of the Eastern District of Texas, who was appointed by President Obama, issued a major defeat (at least for now) to the Obama Administration, by temporarily enjoining nationwide implementation of new Department of Labor overtime rules under the Fair Labor Standards Act that would have substantially increased the salary threshold for employees to be exempt from overtime eligibility.
The new rules, which were to become effective December 1, 2016, increased from $23,660 per year to $47,892 per year the salary necessary for executive, administrative and professional employees to be exempt from receiving overtime pay when they work more than 40 hours a week. The new rules also provided for additional changes, including automatic increases in the salary threshold every three years, based upon the 40th percentile of earnings for full-time salaried workers in the lowest-wage census region in the United States.
Responding to lawsuits filed by 21 states and various business groups, which were consolidated into one case, Judge Mazzant placed implementation of the new overtime rules on hold, finding that:
- Congress did not authorize the Department of Labor to establish salary thresholds for executive, administrative and professional employees to be exempt from overtime eligibility.
- Congress did not authorize the Department of Labor to implement automatic future increases in salary thresholds for overtime exemptions.
- A nationwide injunction is appropriate in this case.
Although an expedited appeal of Judge Mazzant’s injunction decision is possible, the Department of Labor has not yet announced whether an appeal will be filed. There is further uncertainty with respect to how the incoming Trump Administration will address this issue. Please stay tuned – KKAL will keep you posted.
In the meantime, please let us know if you have any immediate questions on this issue. We have worked with many of you to develop plans in response to the new FLSA overtime rules. The specific manner in which an employer planned to respond to the new overtime rules will determine whether and how Judge Mazzant’s injunction has any impact on your plan. We can address with KKAL clients on an individual basis whether the injunction impacts your particular plan.
We hope you find this issue of KKAL’s Labor and Employment Law Watch helpful and informative. Please understand that the Law Watch is designed to provide information about current developments and required actions. If you have any questions regarding any labor and employment law matter, including the issues discussed in this newsletter, please do not hesitate to contact us at 717-392-1100, or email us at the following addresses:
KEGEL KELIN ALMY & LORD LLP
Labor & Employment Practice Group
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