Federal Court in Texas Halts Overtime Rule

Yesterday, Judge Amos Mazzant of the federal U.S. District Court for the Eastern District of Texas granted a preliminary injunction blocking the U.S. Department of Labor’s long-awaited overtime rule from taking effect December 1, 2016. Nevada v. DOL (E.D. Tx. 2016). The rule would have increased the minimum salary for employees exempt from overtime under the Executive, Administrative, and Professional exemptions from $23,660 per year to $47,476. The injunction is estimated to affect some 4 million workers.

Judge Mazzant, an Obama appointee, held that the rule would effectively substitute salary level for occupational duties in the analysis of whether employees received overtime for hours over 40 in a workweek, or were paid a recurring salary regardless of hours worked. Such an analysis was counter to the intent of the Fair Labor Standards Act of 1938, Judge Mazzant wrote.

A preliminary injunction, unlike a temporary restraining order, does not automatically expire. Accordingly, yesterday’s decision will likely be appealed, leading to uncertainty for the foreseeable future. Some employers who had already informed their employees of salary increases have said they will continue with their plans, which were spurred by change in regulation. However, with no clear timetable, members can—at least for the time being—delay their plans to implement changes required by the rule.

MSEC will continue to monitor this story closely.