Federal Judge Halts New Overtime Rule Issuing Nationwide Injunction

On November 22, 2016, just days before the U.S. Department of Labor’s Final Rule regarding the new overtime pay standards under the FLSA for “white collar” employees was scheduled to go into effect, a federal judge in Texas stepped in and issued a nationwide injunction preventing the Department of Labor from implementing and enforcing the new overtime rule pending further judicial review.

As highlighted in our previous blog post earlier this year, under the Final Rule, the minimum salary threshold for executive, administrative and professional employees was scheduled to be raised from $455 per week ($23,660 per year) to $913 per week ($47,476 per year) starting December 1, 2016, which, according to the Department of Labor, would extend overtime eligibility to approximately 4.2 million workers nationwide.

In September, 2016, twenty-one states filed suit against the Department of Labor seeking an injunction to prevent the implementation of the Final Rule.  In granting the injunction, the federal judge ruled that the imposition of the minimum salary threshold (which the ruling characterized as a “de facto salary-only test”) conflicted with Congress’s intent behind the “white collar” exemption, and that the Department of Labor exceeded its delegated authority under the FLSA.

The fate of the new overtime rule remains in question, and it is unclear how the outgoing Obama administration and incoming Trump administration will respond to this ruling.  In the meantime, unless an appellate court takes prompt action to reverse and lift the nationwide injunction, the existing FLSA overtime rules will continue beyond December 1st.