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Paul Zimmerman
pzimmerman@mrllp.com
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Injunction Issued in DOL Overtime Case

On Tuesday November 22, 2016, a federal District Judge in Texas issued a preliminary injunction which, for now, blocks the implementation of new Fair Labor Standards Act (“FLSA”) regulations that were set to go into effect on December 1.  The regulations, which dramatically increase the minimum salary for the executive, administrative and professional “white collar” exemptions, would have significantly expanded the coverage of the FLSA by converting employees who are currently exempt from the FLSA’s overtime coverage into non-exempt employees who are eligible for overtime.  The new regulations also created an “index” to be used to increase the minimum salary on a periodic basis. 

In issuing the injunction, District Judge Amos Mazzant stated:  “The court determines that the state plaintiffs have satisfied all prerequisites for a preliminary injunction,” Judge Mazzant said. “The state plaintiffs have established a prima facie case that the Department’s salary level under the final rule and the automatic updating mechanism are without statutory authority.”

The action, which was initiated by twenty-one states, with Nevada and Texas leading the charge, applies nationwide. Preliminary injunctions, however, are just that. The judge could change his mind later in the litigation, or an appellate court could, conceivably, step in and overturn the injunction.

Employers that put much effort into reviewing and analyzing how these new regulations would impact their workforce are now left wondering what to do. Some companies have already implemented or announced salary increases in order to maintain the exempt status of certain employees. In those situations it may be unwise from a morale perspective to delay or reverse those decisions. A reversal may also be potentially unlawful depending on your jurisdiction. It does seem safe, however, to hold off on re-classifying employees who would no longer meet the exemption, at least until the injunction is lifted or there is more clarity as to an effective date. 

These are essentially unchartered waters for many employers, HR specialists and employment law practitioners. As in any litigation, this is just the first ruling in what may turn out to be a long, drawn out court battle. The shift to a Republican President and Congress, however, may short-circuit the litigation, and casts further doubt on whether these new regulations will ever become effective. 

We will continue to follow these developments as they unfold. 

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.