Texas Federal Judge Amos Mazzant issued a nationwide preliminary injunction last night, blocking the Department of Labor’s new overtime pay rule, and putting into peril one of President Obama’s signature accomplishments in respect to boosting wages. The new overtime pay rule, set to be effective next week on December 1st, would have doubled the minimum salary level required for an executive, administrative, or professional exemption from the Fair Labor Standards Act’s overtime requirements, and established an automatic increase in future years. It was expected to cost Kentucky employers $19 million in added labor and compliance costs.
DOL Overstepped Authority
In his 20-page opinion, Judge Mazzant stated that the DOL overstepped its authority, and disagreed with the argument that it was merely updating the rule to keep up with the modern economy. He also pointed out that the substantial increase in salary threshold could lead to inconsistent treatment of workers who each fulfill white collar duties, but are paid differently. “If Congress intended the salary requirement to supplant the duties test, then Congress, and not the USDOL, should make that change.”
The injunction suspends enforcement of the new regulations until and unless the government wins a countermanding order from an appeals court. Judge Mazzant refused the government’s request to hold off on the injunction. He said that states would suffer immediate harm if forced to choose between increasing salaries of thousands of employees, or cutting back on work hours and services.
The temporary injunction is significant given that a review by the courts will most likely not occur until next year when the new administration is in place. The new overtime rule is one of the many regulations President-elect Trump indicated opposition to during his campaign.
If you have already begun implementing salary changes, undoing these increases could have a significant impact on employee morale. If you were waiting until next week to make changes, you can hold off until further notice, but should still have plans in place to move forward if and when necessary. Let your employees know that you are monitoring the case and will act when appropriate.