Time is Running Out for the Overtime Rule

By Nancy Hammer Dec 2, 2016
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On Nov. 22, U.S. District Court Judge Amos L. Mazzant issued a preliminary nationwide injunction preventing the Obama Administration's overtime rule from becoming effective on December 1, 2016 as originally scheduled.  In issuing the temporary injunction, the court determined that those challenging the rule, 21 states and more than 50 employer groups, stood a significant chance of success and faced a substantial threat of irreparable harm if the rule was not halted. On Dec. 1, the Department of Labor appealed the preliminary injunction.

A preliminary injunction is temporary in nature—it prevents the changes from going into effect until the court has a chance to thoroughly review the legal arguments. Therefore, the practical effect of this injunction is to preserve the rules that employers currently use to determine which employees are exempt from overtime under the FLSA and which are not. As a result, HR professionals are holding off on implementing changes and some employers that complied with the rule ahead of schedule are rolling back changes until the issue is finally resolved.

In its opinion, the court found that DOL "exceeds its delegated authority and ignores Congress's intent by raising the minimum salary level such that it supplants the duties test."  DOL's appeal will be heard in the 5th circuit court of appeals but whether the appellate court is able to review the injunction quickly remains to be seen. Unless the court is able to decide the case on an expedited basis, it is likely to continue past inauguration day when the new Administration, which has already stated its opposition to regulations in general and this rule in particular, takes control. 

While SHRM supported a reasonable increase in the salary threshold, we welcomed the court's injunction of the rule because the salary threshold in the final rule was too high and the increase would be enacted too quickly.  SHRM was also concerned that the automatic increases would prevent the public from having input on an appropriate salary threshold in the future.

Although DOL is reviewing its legal options and the court could ultimately decide to let the rule changes go forward, most observers believe it is more likely that the fate of any overtime salary threshold increase will now be in the hands of the incoming Trump Administration. It is not clear at this time, whether the Trump Administration DOL would seek a more reasonable update of the salary threshold as SHRM and other employer groups have supported.

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