Friday, April 21, 2017

What Happened to the New Federal Overtime Rules? They Are On Hold With An Uncertain Future.

As we previously reported, on November 22, 2016, a federal district court judge in Texas issued a nationwide preliminary injunction enjoining the U.S. Department of Labor (DOL) from implementing and enforcing the new Fair Labor Standards Act (FLSA) overtime rules that were supposed to apply on December 1, 2016. The injunction essentially put the implementation of the new regulations on hold pending further litigation.

After the injunction ruling, the DOL appealed to the Fifth Circuit Court of Appeals asking for an expedited appeal. The Fifth Circuit granted the DOL’s request, but after the election of President Trump, the DOL asked the Fifth Circuit to delay the case by extending the deadline for the DOL to file an appellate reply brief. The Fifth Circuit granted that request and extended the deadline to file the brief to March 2, 2017. In February 2017, the DOL asked for an additional 60 days, until May 1, 2017, to file its brief “to allow incoming leadership personnel adequate time to consider the issues.” The Fifth Circuit granted this unopposed request.

Some have speculated that the DOL asked for the additional 60 day extension based on Andrew Puzder’s withdrawal as a candidate for Secretary of Labor. The thought was that the requested additional time would give the new nominee, Alexander Acosta, time to assess the government’s position on the new FLSA rules. However, as of now, Mr. Acosta has not been confirmed as Secretary of Labor. Mr. Puzder was an outspoken critic of the new rules and it was expected that he would take steps to drop the DOL’s defense of the rule. Mr. Acosta has not yet taken a public position on the new rules. As a result, it is unclear how the DOL will handle the ongoing appeal.

In the meantime, the Texas court denied a motion by the DOL to stay the continuance of the action pending the outcome of the appeal. The judge denied that motion stating that the DOL has not shown that it is likely to succeed on the merits of the underlying case. As a result, the underlying lawsuit seeking to permanently enjoin the new rules is still pending and is working its way to a final decision on the merits of the case.

At this point, we do not know what position will be taken by the Trump administration. Most pundits are speculating that the Trump administration will stop implantation of the new rules by dismissing the appeal and not defending the rules in the lower court. However, it is possible that the administration may take steps to allow the rules to take effect (possibly retroactive to December 1, 2016). Hopefully, we will know more by May 1.

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