On Tuesday, November 22, Judge Amos Mazzant III issued an injunction blocking the overtime rule changes that were set to take effect on December 1. These changes would have raised the white collar exemption from $455/week ($23,660/year) to $913/week ($47,476/year) and provided for future adjustments to the exemption on a triennial basis.
Twenty one states and the U.S. Chamber of Commerce filed suit to block the overtime rule changes in October. The separate lawsuits were consolidated into one before the U.S. District Court in the Eastern District in Texas. The plaintiff’s arguments before the courts are twofold:
1) Exemption from overtime is primarily decided by the duties an employee performs (duties test) and by raising the salary threshold to $47,476, the Department of Labor (DOL) is giving primacy to the salary level test which oversteps the Department’s authority as granted by Congress, and;
2) The DOL is exceeding its mandate by building automatic salary level threshold adjustments into the new rule.
Because of the likelihood of irreparable harm were the changes to be enacted, the plaintiffs asked for an injunction delaying the December 1 effective date until a final ruling on the case can be issued.
In granting the injunction, Judge Mazzant III, seemed to indicate his agreement with the plaintiffs that the DOL overstepped its authority when setting the new white collar exemption. In his ruling he stated “…it is clear Congress intended the EAP exemption to apply to employees doing actual executive, administrative and professional duties. In other words, Congress defined the EAP exemption with regard to duties, which does not include a minimum salary level.”
He agreed that the cost projections, both direct and indirect, laid out by the states in their argument, rose to the level of irreparable harm and an injunction should be granted until the case can be fully decided on its merits. The DOL disagrees with this decision and is currently reviewing its legal options.
An injunction is not a permanent rollback of the overtime rule changes. They could still go into effect after a full review of the case. However, injunctions are also not granted unless the actual case is likely to succeed on its merits. The judge has a belief that there is legal standing to what the states and Chamber of Commerce have argued.
For now, businesses can put their plans to comply with the overtime changes on hold; employees who would have become non-exempt as of December 1 can remain exempt from overtime provided they are paid on a salaried basis, continue to make the current white collar exemption level of $455/week and meet all of the responsibilities of one of the duties tests.
Employers who have announced salary increases or who have already increased salaries of certain employees in an effort raise them above the new white collar exemption will most likely not want to pull those back, less for compliance related reasons and more so due to employee relations issues. Employers should not discard the plans they have developed to comply with the rule changes; they should keep them on hand in case the changes do go into effect at a later date.