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Legal Updates & Alerts

Federal Judge Halts DOL's New Overtime Rules

November 23, 2016
By Haley Morrison

On November 22, 2016, a federal judge in Texas issued a preliminary injunction halting the United States Department of Labor (DOL) from implementing and enforcing its new rules related to the so-called "White Collar Exemptions," which were to be effective on December 1, 2016. 
 
As we informed you in a past Tonkon Tip on the DOL's Final Rule, the DOL effectively doubled the minimum salary threshold for exempt administrative, executive and professional employees from $455 per week ($23,660 annually) to $913 per week ($47,476 annually).

The State of Nevada, along with twenty other states (not including Oregon), filed an emergency motion for preliminary injunction against the DOL to block the implementation of the Final Rule. The Plano Chamber of Commerce, along with 50 other businesses, filed a similar lawsuit. The Texas federal court consolidated the two cases, and on November 16, heard the States' motion for preliminary injunction.

In issuing the nationwide injunction, the court found that Congress intended the White Collar Exemptions to depend on employees' duties, and not their salary. The court concluded that the DOL created "essentially a de facto salary-only test." The judge continued: "If Congress intended the salary requirement to supplant the duties test, then Congress, and not the [DOL], should make that change."

The court also held that the DOL lacks the authority to automatically update the salary basis test every three years, as set forth in the Final Rule.

So, what should employers do with the court's eleventh-hour injunction? The injunction means the new DOL rules will not be effective anywhere in the country on December 1, 2016. Nevertheless, it is important to keep in mind that this is only a preliminary injunction, which by its very nature is temporary.  The preliminary injunction may be changed or dissolved during the pendency of the lawsuit. Employers should not assume that the DOL's new rules will not ultimately be the law of the land. For now, employers will not be required to meet the increased salary levels, but must still comply with the existing exemption rules, including the current salary basis and duties tests. We will update you as the matter progresses.

Tonkon Torp wishes you a very happy Thanksgiving!

This client update is prepared for the general information of our clients and friends. It should not be regarded as legal advice. If you have any questions regarding this update, or for more information about this topic, please contact any of the attorneys in our Labor & Employment group, or the attorney with whom you normally consult.