11th Hour Federal Court Injunction Blocks New FLSA Overtime Rules
As we earlier reported, new Fair Labor Standards Act overtime rules proposed by the Department of Labor that would more than double the salary thresholds for “white collar” employees were set to go into effect on December 1 of this year.
However, at the request of more than 20 State Attorneys General, Federal Judge Amos Mazzant of the Eastern District of Texas, an Obama appointee, granted a nationwide preliminary injunction against the Department’s proposed rule, finding that the AG plaintiffs had shown both a likelihood of success on the merits and irreparable harm in the absence of the injunction.
In his opinion, Judge Mazzant found that Congress unambiguously expressed its intent for employees doing “bona fide executive, administrative, and professional capacity” duties to be “exempt from overtime,” and stated that the Department had exceeded its authority by adopting a “salary test” that categorically excluded a substantial number of workers who met those requirements.
Although the Judge noted that the ruling “only delay[s] the regulation’s implementation,”it is unlikely that the District Court will reverse course or the Court of Appeals will overturn the injunction prior to President-elect Trump’s inauguration. While it is unknown what effect the Trump presidency will have on the ruling or the regulation, Trump has stated that the proposed overtime rule was the type of “burdensome” business regulation he would seek to roll back as President. Accordingly, even if the Department appeals the decision, a Trump administration may decide to drop the appeal or direct the Department to issue new, less burdensome rules.
In the meantime, employers may face a difficult situation. If employers have not already increased salaries or converted employees to non-exempt positions, they may postpone these changes indefinitely. Employers who have already made changes, or have informed their employees of upcoming changes, should seek legal guidance prior to communicating the ruling to their employees or making any rollbacks in salaries or positions. Not only may the inunction have an effect on employee morale, but there could also be potential for breach of contract claims.
The attorneys of Kroger Gardis & Regas stand ready to answer any questions you may have on this surprise development. We will continue to monitor the situation and provide updates as they become available.
Comments are closed