In a dramatic last-minute development, a federal judge in Texas has blocked the U.S. Department of Labor’s (USDOL’s) overtime rule from taking effect on December 1.
The rule would have paved the way for individuals who earn up to $47,476 annually as salaried employees to be paid overtime. Currently, the overtime threshold for salaried workers is $23,000 (annually). The new rule would have also set up automatic updates to the threshold every three years.
On Tuesday, Texas District Judge Amos L. Mazzant III sided with 21 states and business and trade groups when he issued a preliminary injunction preventing the rules from being implemented on a nationwide basis.
In his ruling, Judge Mazzant concluded that the USDOL overstepped its authority:
“To be exempt from overtime, the regulations require an employee to (1) have [executive, administrative or professional] duties; (2) be paid on a salary basis; and (3) meet a minimum salary level….The salary level was purposefully set low to “screen out the obviously nonexempt employees making an analysis of duties in such cases unnecessary.”…But this significant increase to the salary level creates essentially a de facto salary-only test.”
In other words, explained Rich Meneghello, a partner in the Portland office of the employment and labor relations firm Fisher Phillips, the rule change “would have had the effect of causing some 4.2 million workers who are today classified as exempt to become non-exempt, despite the fact they would have exactly the same job duties on December 1. He (the judge) said that Congress never authorized the USDOL to classify white collar workers based on salary alone, and the USDOL ignored Congress’s intent by attempting to raise the minimum salary as it did.”
Meneghello said the fate of the overtime rules is now uncertain, and suggested that employers wait until a final decision is reached in court, Congress and the White House before doing anything further.
“The Trump administration will take over the USDOL in less than two months’ time, and the incoming administration has repeatedly indicated that it wants to eliminate unnecessary regulations hampering the business community,” Meneghello wrote in an email sent to the VBJ. “Unless an appeals court reverses course in the next several weeks and breathes new life into the rules, it is quite possible that the rules will be further delayed, completely overhauled, or altogether scrapped once President Trump takes office.”
The White House and Labor Department have yet to issue a comment on the ruling.
