Client Alerts / 11.28.2016

Texas Judge Blocks DOL Overtime Rule

By Robert J. Bowes and Alex E. Jones

Opponents of the Department of Labor’s (“DOL”) new rule, which increases the minimum salary threshold to be considered exempt from federal overtime laws, scored a big victory this past Tuesday (November 22) when a Texas judge granted a preliminary injunction preventing the DOL from enforcing the new rule.  The rule had been scheduled to go into effect on December 1.  The new rule would increase the minimum salary threshold for exempt (i.e., those who do not qualify for overtime pay) “white collar employees” to $921 per week/$47,892 per year, and increase the minimum salary threshold for exempt “highly compensated employees” to $122,148 per year – almost double the current limits set under the Fair Labor Standards Act.

Twenty-one states and a coalition of business groups brought lawsuits challenging the legality of the new rule. A review of these lawsuits can be found here. Judge Mazzant of the United States District Court for the Eastern District of Texas consolidated these cases for the purposes of the preliminary injunction. In granting the injunction, the Court found that Plaintiffs (the 21 states and business groups) met their burden of demonstrating that they have a substantial likelihood of success on the merits of the case and that there was a prospect of irreparable harm. While the new rule may ultimately be upheld and allowed to go into effect, the injunction maintains the current status quo while the Court considers the legality of the rule and whether the DOL exceeded its authority in promulgating it.

The DOL and the Obama administration are sure to challenge this ruling, but they will be racing against the clock as the Trump administration (along with a Republican House and Senate) is set to take over in January.  Many Republicans in Congress have been vocal about their opposition to this rule. Needless to say, the future and viability of the new rule is very much uncertain.

For more information and for any further developments, please contact your KJK attorneys.