Court Halts Overtime Rule Change
November 25, 2016
On November 22, 2016, the federal district court judge handling a lawsuit filed by a number of states and business groups issued a nationwide preliminary injunction against the U.S. Department of Labor’s implementation and enforcement of its change to its overtime rules.
The new rule, which was to be effective December 1, 2016, would have required that employees paid less than $913 per week ($47,476 per year) could not be exempt from overtime pay requirements regardless of the significance of their duties. It also would have required automatic adjustments to the salary threshold every 3 years. The states and business groups argue that the DOL exceeded its authority in creating the new rule.
A preliminary injunction is issued to preserve the status quo when the party requesting it demonstrates to the court that a proposed action will create irreparable harm if it is allowed to proceed as scheduled, and that there is a substantial likelihood that the party requesting the injunction will succeed in the long run in its legal arguments against the proposed action.
This preliminary injunction means the DOL’s pre-December 1 rules will remain in effect, at least until the decision is overturned on appeal or until the court issues some different order after further proceedings.
How employers respond to this legal development depends on their individual circumstances, including their costs and employee morale. They may:
** Continue with the reclassification or salary changes they already made or scheduled to comply with the new rule;
** Put any changes on hold until further notice.
The preliminary injunction does not require employers to reverse their scheduled pay increases or re-classifications, but it permits it. Employers may not take back pay already received by employees, however. Employers putting changes on hold will want to communicate that to employees, advising them that the decision is based on legal developments.