In a much-welcomed eleventh-hour ruling yesterday, the United States District Court in the Eastern Division of Texas issued a preliminary injunction enjoining the United States Department of Labor ("DOL") from implementing changes to overtime rules under the Fair Labor Standards Act ("FLSA") (the "Final Rule"). The Final Rule, which nearly doubles the salary threshold for the overtime exemption, was scheduled to take effect on December 1, 2016. The injunction blocks the Rule, for now. For more information on what the Final Rule would mean for you or your company, click here
In his Memorandum Opinion and Order, Judge Mazzant found that the Final Rule's salary increase has the effect of excluding from the exemption some 4.2 million workers who are performing exempt-type work, and that this exclusion conflicts with the FLSA.
The Court imposed the injunction nationwide, not just within its jurisdiction. Thus, the injunction blocks (or at least delays) the Final Rule for all employers.
This is not the end. The judge's ruling is only temporary, and could be overturned later by the same court or a higher one (including the United States Supreme Court). What is certain, however, is that the Final Rule will not
go into effect on December 1, 2016 as previously expected.
So what should employers do now?
If you have already changed your compensation structure to conform to the new rule, it might be unpopular to reverse those changes, although you may have the right to do so-at least temporarily. Conversely, if you were waiting until December 1 to make any changes, you may now wait until the courts (or Congress) render a final decision. It will definitely be worth watching to see what action the new administration takes with regard to defending or disowning the Final Rule, since the litigation is certainly not going to be completed before January 20, 2017.
If you would like to know more about how this decision could impact your business or practice, please contact a member of the Frantz Ward Labor & Employment Practice Group