Overtime Litigation in the U.S. District Court of Eastern District of Texas
Friday, December 2, 2016
Federal Department of Labor (DOL) overtime rules scheduled to take effect tomorrow, December 1, 2016, have been blocked by a federal court order that is nationwide in effect.
An Emergency Motion for Preliminary Injunction was issued by the U.S. District Court, Eastern District of Texas enjoining the DOL from implementing and enforcing its Overtime Final Rule. The national breadth of the injunction was the result of a suit brought by the Nevada Attorney General and joined by Attorneys General from Alabama, Arizona, Arkansas, Georgia, Indiana, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Nebraska, Ohio, Oklahoma, South Carolina, Texas, Utah and Wisconsin, together with the governors of Iowa, Maine and New Mexico.
The major item judged to violate congressional authority was the substantial increase in threshold pay level for exemption from $23,660 to $47,476. This means the new provisions will not take effect tomorrow.
There may be a number of other ramifications for AEA members as either employees or employers. The purpose of this memorandum is to inform AEA members of the news, not what action they should take. Some states like California may already exceed the salary threshold, so AEA members and others should consult with legal counsel to determine any effect the proposed rule, the litigation and the injunction may have on their local business practice.
For example, if a pay increase was already granted above the new threshold, say from $47,000 a year to $48,000 a year, this ruling does not force a change in that decision. Again, employers should consider consulting qualified counsel on such details.
Keep in mind that the injunction is temporary not permanent. One thing is clear, that additional legal developments will occur before all this issue is finalized.
On the authority question, regulations like these are sometimes called legislative regulations because of the large number of policy and technical decisions granted by Congress to a department or agency. In this matter, the judge ruled that the authority granted to DOL had been exceeded in particular on the dollar increase noted above. So it will be an interesting legal matter. The DOL explanation is set out below in full.