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Client memo re injunction of DOL overtime regulations

On November 22, 2016, Judge Amos Mazzant in the United States District Court for the Eastern District of Texas issued a nation-wide preliminary injunction that temporarily blocks the U.S. Department of Labor (“DOL”) from implementing and enforcing its revised white collar overtime regulations. The regulatory revisions, which would more than double the minimum salary requirements for the major white collar exemptions to the federal Fair Labor Standards Act (“FLSA”), were set to become effective on December 1, 2016.

Judge Mazzant issued the ruling in a consolidated set of cases brought by 21 states and several business organizations. Both cases challenge the changes to a federal regulation that defines and delimits the standards for evaluating whether employees are exempt executive, administrative or professional employees, who are not eligible for overtime. Under the current regulations, the minimum salary requirement for these exemptions generally is $455 per week, or $23,660 per year. Under the revised regulations, the minimum salary would more than double to $913 per week, or $47,476 per year

In his decision, Judge Mazzant found that the plaintiffs’ challenge to the final regulations has a substantial likelihood of success on the merits and that the plaintiffs have shown that they would be irreparably harmed if the rule was not enjoined.

For the many employers that have been struggling to meet the December 1 effective date, the ruling offers some welcome relief. It does not, however, provide any certainty for the future. Although the injunction halts the revised regulations from becoming effective on December 1, it is a preliminary injunction, not a permanent one, and it does not necessarily mean that the new rule will be gone forever, either in its current form or in some revised form under a Trump administration. It is expected that the preliminary injunction decision will be appealed to the Fifth Circuit Court of Appeals. If the decision is reversed by the Fifth Circuit, and the employer has not been in compliance on the December 1 effective date, a thorny question arises: whether the existence of the preliminary injunction precludes any liability between the December 1, 2016 effective date and the date the Court of Appeals issues its decision. Courts are split on this issue, which raises further uncertainty.

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