As we let you know last
week, legal challenges to the new federal overtime pay rules scheduled to
go into effect on December 1, 2016, are pending in federal district court in
Texas. On November 22, 2016, the Judge hearing the Texas cases issued a
nationwide preliminary injunction enjoining the U.S. Department of Labor (DOL) from
implementing and enforcing the new rules. As such, employers who were busily
preparing to comply with those rules have a reprieve – at least for now- from
having to comply.
In his decision, Texas Judge Mazzant concluded that the plaintiffs established a prima facie case that the increased
exempt employee salary levels and the automatic salary updating mechanism in
the new rules were set without statutory authority. In other words, the plaintiffs
presented enough proof to establish a rebuttable presumption that the DOL did
not have statutory authority to issues the regulations.
So what happens now? A nationwide
preliminary injunction was entered by the Texas court prior to a final
determination on the merits. At this point, implementation of the new
regulations is merely delayed. As the case moves forward, the DOL will have the
opportunity to rebut the presumption that it lacked authority to issue the new
rules. After hearing the evidence and argument of the parties, the court could either
confirm its preliminary decision or conclude that the DOL did, in fact, have
authority to issue the regulations. The delay in rule implementation may also
mean that Congress or the new Trump administration will have time to pursue retraction
or retrenchment of the overtime rules. While employers should not assume that
the new regulations will never be implemented, at this point compliance
obligations are on hold and implementation of the rules as issued by the DOL is
uncertain.
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