GM 16-073

Federal District Court Issues Preliminary Injunction Blocking Implementation of Department of Labor Overtime Pay Rule Nationwide

As we reported in our General Memorandum 16-035 of May 24, 2016, the United States Department of Labor (DOL) published a final rule that expands the number of salaried employees who are eligible to receive overtime pay under the Fair Labor Standards Act (FLSA). The rule doubles the minimum salary amount used as one prong of the exemption test for “white collar” employees in executive, administrative and professional positions, and was expected to expand overtime eligibility to millions of workers nationwide. The implementation of this rule was scheduled to begin on December 1, 2016.

However, on September 20, 2016, several states, including Nevada, Ohio, Texas, and Oklahoma, brought suit against the DOL in the Eastern District of Texas challenging the new overtime pay rule. On November 22, 2016, Judge Amos Mazzant granted a preliminary injunction delaying the rule’s implementation nationwide until he gives further consideration to the arguments made in the case. The Court has thus enjoined the DOL from implementing the new overtime pay rule on December 1, 2016.

The DOL has indicated that it is currently considering its legal options, which include a possible appeal to the Fifth Circuit. Complicating this consideration is the ongoing transition to the Trump Administration. President-elect Trump said he would look at revoking this rule altogether, or alternatively propose to exempt small business from its requirements. We will continue to monitor this case as well as any developments regarding the overtime pay rule, and will aim to provide updates on any critical changes that arise.

Please let us know if we may provide additional information or analysis on this matter.