Benefits Insights, Winter 2017
In November, a federal district court judge in Texas granted a preliminary injunction suspending the US Department of Labor’s final rule regarding the extension of overtime pay for more than 4.2 million workers. The injunction delays the implementation of the overtime final rule, which was to take effect December 1.
The State of Nevada, along with 20 other states, had filed the Emergency Motion for Preliminary Injunction to block the overtime rule nationwide. After the judge determined that there was an apparent correlation between the final rule and immediate monetary loss the injunction was granted. In his ruling, the judge found it likely that the DOL had overstepped its authority by raising the salary threshold that businesses are to use to determine whether employees are exempt from being paid overtime.
The final rule had been issued in May to carry out the 2014 presidential memorandum to increase overtime pay to promote higher take-home compensation and allow workers a better life/work balance. The final rule included updating overtime regulations to address the salary and compensation levels needed for executive, administrative, and professional employees to be exempt. The rule also simplified the identification of nonexempt employees and created a process that automatically updates the compensation thresholds.
The DOL had asked the court to limit the injunction to the states that were able to show evidence of irreparable harm, but the judge rejected that, saying that the states would suffer immediate harm because they would be forced to choose between raising the salaries of thousands of managerial employees or cutting back on services and work hours.
Unless the DOL can win a countermanding order from an appeals court, the injunction prevents enforcement of the rule. It seems unlikely that DOL will be able to revive the rule in light of Donald Trump’s victory and Republican control of both houses of Congress.