New Overtime Rule Put On Hold by Federal Injunction

A recent ruling by U.S. District Judge Mazzant has put a nationwide hold on the Department of Labor’s new overtime rule, which was supposed to go into effect on December 1, 2016. The overtime rule was challenged by 21 states and more than 50 business groups. Those contesting the new rule were concerned that businesses would suffer significant financial harm should it go into effect.

The updated rule was in response to President Obama instructing the Secretary of Labor to update the existing overtime regulations under the Fair Labor Standards Act for the first time since 2004. Had the new regulations gone into effect as planned on December 1, the minimum salary level for exempt employees would have gone from $23,660 annually ($455 per week) to $47,892 annually ($921 per week) and would have extended overtime pay to more than 4 million workers.

Those involved in the lawsuit argued that the Department of Labor exceeded the authority that they are given by Congress by raising the minimum salary level. Judge Mazzant ruled that “A preliminary injunction preserves the status quo while the Court determines the Department’s authority to make the Final Rule as well as the Final Rule’s validity.”

Additionally, the judge’s reasoning for implementing the injunction nationwide, instead of applying it to only the 21 states involved in the case was as follows, “A nationwide injunction is proper in this case. The Final Rule is applicable to all states. Consequently, the scope of the alleged irreparable injury extends nationwide. A nationwide injunction protects both employees and employers from being subject to different EAP exemptions based on location.”

The Department of Labor has stated it “strongly disagrees with the decision by the court. The Department’s Overtime Final Rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule.” The Department of Labor has filed the opening brief in its appeal and the states’ response brief is due on January 17, 2017.

Since Judge Mazzant issued an injunction and not a final ruling, we will have to wait and see what the final ruling is in regards to the new regulations. Should you have any questions about how this effects your business, please contact us at (805) 963-7811.