December 1 Overtime Rule Blocked: Texas Court GRANTS 21-State Emergency Motion for Preliminary Injunction
At the eleventh hour, U.S. District Judge Amos Mazzant of the East District of Texas ruled in favor of 21 states and issued a nationwide injunction against the U.S. Department of Labor (DOL) and its efforts to radically expand the coverage of the Fair Labor Standards Act (FLSA). Specifically, per the order issued in State of Nevada v. United States Department of Labor on Nov. 22:
“… the [DOL’s] Final Rule described at 81 Fed. Reg. 32,391 is hereby enjoined. Specifically, Defendants are enjoined from implementing and enforcing the following regulations as amended by 81 Fed. Reg. 32,391; 29 C.F.R. §§ 541.100, 541.200, 541.204, 541.300, 541.400, 541.600, 541.602, 541.604, 541.605, and 541.607 pending further order of this Court.”
The preliminary injunction is a blow to the DOL, which had estimated expanded overtime coverage to more than four million additional employees. The court’s order, at least for the time being, halts enforcement of the Final Rule, which was due to go into effect next week, on Dec. 1.
The 21 states that requested the emergency relief satisfied the prerequisites for a preliminary injunction, the Texas court said. According to Judge Mazzant, who was appointed by President Obama in 2014, “The state plaintiffs have established a prima facie case that the [DOL’s] salary level under the Final Rule and the automatic updating mechanism are without statutory authority.” Further, the court concluded that the governing statute for the Executive, Administrative and Professional exemptions, 29 U.S.C. § 213(a)(1), “is plain and unambiguous and no deference is owed to the DOL regarding its interpretation.” The court determined that it has authority to enjoin the final rule on a nationwide basis.
At a hearing in this case last week, Judge Mazzant gave advance notice that his decision would be issued by Nov. 22. The implementation date for the new DOL rule was Dec. 1, and numerous employers have already made necessary changes to comply with the deadline. The new rule would have, as of Dec. 1, increased the FLSA’s “white collar” exemption from $23,660 to $47,476 per year, with an index for future increases.
In their complaint, the 21 states asserted that the DOL’s new threshold “rendered virtually irrelevant any inquiry into whether an employee is actually working in an executive, administrative, or professional capacity” and therefore eligible for overtime.
Of course, a preliminary injunction is not final, and now employers – many that have already implemented changes to comply with the impending Dec. 1 deadline – need to decide how to proceed. However, given the change in administration, it is not clear if these regulations ever will be put into effect. We will provide continuing analysis of the status of the preliminary injunction and how employers can and should address it.