Ironic? Obama Appointee Stops New Overtime Rule
Surprise! On November 22, 2016, Federal Judge Amos Mazzant issued a nationwide injunction against the new Department of Labor Overtime Rules. Scheduled to take effect on December 1, 2016, the new rules increased the salary basis necessary to classify employees as exempt from being paid overtime. To be exempt, employees must meet BOTH the salary test and the duties test.
The salary test was scheduled to go from $455/week or $23,660/year to $913/week or $47,476/year. But Judge Mazzant of the Eastern District of Texas struck down the new salary basis rule and it will not take effect on December 1, 2016. Judge Mazzant granted the injunction against the DOL regulation because the “significant increase to the salary level creates essentially a de facto salary-only test.” The judge found that “Congress did not intend salary to categorically exclude an employee with EAP [Executive, Administrative and Professional] duties from the exemption.”
The timing of this ruling likely means that the regulation will never be implemented as written by the current Department of Labor. Even if this decision is appealed by the Obama administration, any further action on this case will not happen until after a new Secretary of Labor is appointed. The new Secretary can direct that the appeal be withdrawn and this injunction would become permanent.
Employers who have been preparing to make dramatic changes in order to meet the new rules should re-assess. This action means that nothing will change on December 1st and you may want to take the time to unwind preparations and communicate with employees that nothing will be changing. As always, consult with an experienced employment attorney if you have questions.