Tags

, , , , , , , , ,

In the much awaited ruling from the United States District Court for the Eastern District of Texas, Judge Amos Mazzant issued an injunction banning the implementation and enforcement of the Department of Labor’s (DOL) overtime rule that was set to take effect on December 1, 2016.  If implemented, the overtime rule would have increased the exempt salary threshold under the Fair Labor Standards Act (FLSA) from $455.00 weekly to $913.00 weekly, thereby requiring anyone making under $913.00 per week to be paid overtime for any hours worked over a standard 40-hour week. The Rule also provided that the salary threshold would increase automatically every three years.

Twenty-one States brought suit against the DOL and moved for a preliminary injunction to stop the implementation of the overtime rule. In granting the injunction, the Court found that “[t]he State Plaintiffs have established a prima facie case that the Department’s salary level under the Final [Overtime] Rule and the automatic updating mechanism are without statutory authority” and that the States would suffer irreparable harm if the rule were permitted to go into effect on December 1.

Specifically, the Court noted that Section 213(a)(1) of the FLSA (also known as the EAP exemption) provides that “any employee employed in a bona fide executive, administrative, or professional capacity . . . as such terms are defined and delimited from time to time by regulations of the Secretary” shall be exempt from minimum wage and overtime requirements. 29 U.S.C. § 213(a)(1). The Court found that Congress’s intent was clear from the statute’s unambiguous language, and that Congress intended the EAP exemption to be tied to the duties of the job, not a salary level.

The Court also found that, although Section 213(a)(1) authorizes the DOL to define the types of duties that would qualify an employee for exemption, it does not authorize the DOL to set a minimum exemption salary level. Thus, the Court concluded that the DOL exceeded its delegated authority “by raising the minimum salary level such that it supplants the duties test.” The Court explained that the “Department’s role is to carry out Congress’s intent. If Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change.”

Although only twenty-one States moved for the preliminary injunction, the Court issued a nationwide injunction, reasoning that because the overtime rule applied to all states, the scope of the irreparable injury extended nationwide.

Today’s ruling is not the final word. The injunction merely maintains the status quo until the Court rules on the merits of the case or the issue is decided on appeal. A ruling on the merits, however, may be here before we know it. In addition to the twenty-one States that have challenged the overtime rule, more than fifty business organizations also have sued the DOL challenging the rule. The two lawsuits have been consolidated before Judge Mazzant, and the Business Plaintiffs have moved for expedited summary judgment. The issues have been fully briefed and are ripe for the Court’s consideration. The Court may rule on the papers, but has reserved November 28th for a hearing, if necessary.

For now, employers are not required to follow the new overtime rule. Its implementation is stayed until further court or legislative action.