New Overtime Rule Stopped in its Tracks

 

On November 22, 2016, an Obama appointed federal judge in the Eastern District of Texas put a temporary, nationwide halt to the new U.S. Department of Labor overtime rules for managerial, administrative, and professional employees.  The new rule would have made most businesses pay a salary of at least $47,424 per year to these employees to keep from having to pay them overtime.

 

That means the new rule will NOT go into effect December 1 as originally planned.

 

The Judge's primary concern was the magnitude of the salary increase: the existing rule required employers to pay employees a salary of only $23,660 per year to keep from paying overtime.  This obviously leaves the door open for the DOL to write a revised rule which still increases the minimum salary, but substantially lowers the level of the salary increase. The temporary injunction may even spur Trump to make an early mark on federal wage and hour laws.

 

Of course, under the new or old overtime rules, the minimum salary is only part of the overtime exempt or non-exempt equation.  Employers still have to show that the primary job functions of their managerial, administrative, or professional employees meet the “job duties tests” set out in the regulations.  These "job duties tests" are not affected by the Judge's ruling.

 

The injunction is just a preliminary one, meaning the case would still have to be litigated on the merits to determine whether the ban becomes a permanent one.  In the meantime, the Department of Labor can appeal the injunction to the United States Court of Appeals for the 5th Circuit.  For now, however, the old minimum salary of $23,660 will still be the law of the land. Businesses can go back to business as usual - as it was before the new rules were written.

 

Stay tuned for more updates as events unfold.

 

 

 

The information in this article is not legal advice, and you should not take any action based on information you find in this article without first consulting qualified legal counsel concerning the facts and circumstances of your situation. No attorney-client relationship is established by reading this article.