On November 22, 2016, a federal judge in Texas issued a nationwide preliminary injunction blocking the implementation of the U.S. Department of Labor’s new overtime regulations that were set to go into effect on December 1, 2016. The new regulations increased the salary level for executive, administrative, and professional employees (i.e., “white collar” positions) to qualify as exempt from overtime pay from $455/week ($23,660/year) to $913/week ($47,476/year). To qualify for the “white collar” exemptions, employees must meet the salary threshold and perform certain duties that are set forth in the federal regulations.
As we previously reported in September and at our recent “Year in Review” conferences, 21 states and over 50 business groups challenged the new overtime rules. They argued that the Department of Labor exceeded its authority by setting the salary threshold so high that many employees who perform exempt “white collar” duties cannot qualify for the exemptions because their salaries do not meet the threshold. Their argument is based in part on the idea that Congress did not intend for the salary test to supplant the duties test. The Texas judge found that the plaintiffs demonstrated a substantial likelihood of prevailing on their challenge to the overtime rules and issued the preliminary injunction to prevent the rules from going into effect until the case goes to trial.
The preliminary injunction means the new overtime rules will not go into effect on December 1. The delay in implementation may provide the incoming administration the opportunity to change or repeal the regulations before they go into effect. We will continue to monitor this litigation and update our clients on significant developments.