Breaking News: Judge Delays Implementation of Overtime Rule
November 23, 2016
In a surprising development, a federal judge in Texas granted an emergency injunction late Tuesday afternoon blocking the implementation of a new overtime rule that would have given more white collar workers overtime.
Judge Amos L. Mazzant from the Federal District Court for the Eastern District of Texas had a hearing Nov. 16 to decide whether to issue a preliminary injunction delaying the December 1, 2016, effective date for the new DOL regulations. Many observers believed that Mazzant, a recent appointee by President Obama, would not issue the injunction in the Nevada v. U.S. Department of Labor case. However, it has been widely noted that the U.S. District Court in East Texas has been very plaintiff-friendly.
“Due to the approaching effective date of the Final Rule, the Court’s ability to render a meaningful decision on the merits is in jeopardy. 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,” Mazzant wrote in his 20-page order.
While this does not kill the DOL regulation, it is definitely on life support,” said T. Scott Gilligan, general counsel for the National Funeral Directors Association. “Given the strength of the judge’s ruling, it is very unlikely that he will later change his mind and uphold the regulation. Moreover, when his decision is appealed, it goes to the 5th Circuit Court of Appeals which is very conservative and is unlikely to overturn Judge Mazzant’s decision.” The 5th U.S. Circuit Court of Appeals in New Orleans blocked President Obama’s executive actions on immigration in 2015.
Gilligan said that another factor that will come into play is the change of administrations that takes place at the end of January. “It is likely that the Justice Department under Trump may simply drop the appeal and allow the judge’s ruling to stand, which would kill the regulation.”
The rule, issued by the Labor Department, was to take effect Dec. 1 and would have doubled to $47,500 the maximum salary a worker can earn and still be eligible for mandatory overtime pay.
Some 21 states and more than 50 business groups filed sued to block implementation of the rule, alleging that it would cause significant financial harm.
“With the Final Rule, the Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test. 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,” Mazzant said in his ruling.
Put in plain language, the judge ruled that the Department of Labor does not have the authority to set a minimum salary for an employee qualifying for the white collar exemption. Therefore, not only is the December 1, 2016 proposed increase in the minimum salary level test invalid, but the entire requirement of a minimum salary level has been thrown out by the judge.
In 2014, President Obama directed the Secretary of Labor to update the overtime regulations to reflect the original intent of the Fair Labor Standards Act, and to simplify and modernize the rules so they’re easier for workers and businesses to understand and apply. The department has issued a final rule that would have put more money in the pockets of middle class workers – or give them more free time.
The final rule would have:
Raise the salary threshold indicating eligibility from $455/week to $913 ($47,476 per year), ensuring protections to 4.2 million workers.
Automatically update the salary threshold every three years, based on wage growth over time, increasing predictability.
Strengthen overtime protections for salaried workers already entitled to overtime.
Provide greater clarity for workers and employers.
This article appears in the November 24, 2016, edition of the Memorial Business JournalLink to the original on NFDA website: http://www.nfda.org/news/in-the-news/nfda-news/id/1674/_cldee/dgh1bmrlcmrvbwvsyxdaz21hawwuy29t/recipientid/contact-b21f0fcf7fb5e51194342c44fd7bbf5b-81533d86d9194b45a2c9975fc5310d93/esid/529bde0e-b3b5-e611-943b-2c44fd7bbf5b