DOL Overtime Rules Enjoined

December 19, 2016 Posted By Patricia Kakalec

On November 22, 2016, a district judge in the Eastern District of Texas in the case State of Nevada v. U.S. Department of Labor (16-CV-731) issued an injunction against the implementation of U.S. Department of Labor (“DOL”) regulations related to eligibility for overtime pay for those who might be subject to the executive, administrative, and professional exemptions under the Fair Labor Standards Act.   Then new regulations, which were to go into effect on December 1, 2016, would have increased the salary threshold for exemption from overtime from $23,665 to $47,476, and also provided for automatic future increases.

In issuing its injunction, the district court held that the DOL “exceed[ed] its delegated authority and ignor[ed] Congress’s intent” by creating a “de-factor salary only test” for overtime eligibility.   The injunction means that the rule did not go into effect, and the salaries of employees around the country were effected.

Workers’ rights groups and others argue that the decision was both wrongly decided and problematic as a matter of public policy.   Christine Owen, the Executive Director of the National Employment Labor Project says that “[s]upporters of the rule are considering a range of legal strategies, and it’s premature to speculate about the course they’ll pursue if an appeal is filed. We believe the judge’s analysis and decision are deeply flawed and should be reversed on appeal.”    The DOL, which says it “strongly disagrees with the decision,” has filed a notice of appeal, although it is not clear that the incoming administration will continue with the appeal.

Despite this decision, some employers have gone ahead and implemented planned changes and salary increases.   For example, Pennsylvania-based, Sheetz, Inc. – which operates gas stations and convenience stores/quick service restaurants – announced its plans to continue with planned wage increases, stating that its decision “represents our constant efforts toward attracting and retaining the best talent and being a great place to work.  It is a commitment that reaches beyond compensation, to the offering of excellent benefits and a great balance between work and family.”

UPDATE:   On January 3, 2017, the Texas court denied the USDOL’s motion to stay the decision pending appeal.

Stay tuned for further developments on the case.

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