Employers can breathe a sigh of relief. Unexpectedly, the U.S. District Court for the Eastern District of Texas today entered a national preliminary injunction blocking the U.S. Department of Labor’s new overtime regulations which were set to take effect on December 1, 2016. In issuing the injunction, the Court held that the regulations improperly created a “de facto salary test” for determining which employees met the “white collar” exemptions under the Fair Labor Standards Act.
This is a major shock to employers across the country who, for the past several months, have been preparing to comply with the regulations next week by, among other measures, reclassifying workers to non-exempt status and increasing salaries of their exempt workers to meet the new threshold of $47,476.00 to maintain their exempt status.
The Judge, in his decision, stated, “the state plaintiffs have established . . . that the Department’s salary level under the final rule and the automatic updating mechanism are without statutory authority.”
While this is good news for employers who have not yet finalized their plans to be compliant with the new regulations come December 1, 2016, employers should keep in mind that the Court today only entered a preliminary injunction. The Court may or may not later make this injunction permanent, thus today’s ruling does not mean for certain that the DOL’s new regulations will never take effect. It only means – for now – that the regulations will not be in effect December 1, 2016.
Employers who have already taken steps to be compliant come December 1, 2016 will need to determine whether they will continue on with changes they may have made (and communicated to employees), or whether they will be putting those changes on hold until the law becomes clear as to the fate of these regulations (e.g., whether the Court makes the preliminary injunction permanent).
Consult with qualified legal counsel with questions you may have.
This newsletter is for informational purposes only and should not be relied upon as legal advice.
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