On Tuesday evening, just days before the U.S. Department of Labor’s new overtime regulations were set to go into effect, a Texas federal judge blocked the December 1, 2016 implementation of the regulations, issuing a temporary injunction with nationwide applicability. The regulations blocked by this order not only provided for a substantial increase in the salary threshold required for the “white collar” exemptions, but also provided for automatic increases in the salary threshold every three years. The judge stated that, in drafting these rules, the DOL exceeded its authority and ignored congressional intent.
This order is not a final order, but merely a finding by the court that the plaintiffs have established they will likely succeed in their challenge to the rules. What happens next is yet to be determined. The DOL may appeal to the 5th Circuit Court of Appeals, Congress could pass one of the two pending bills drafted to alter the DOL’s regulations or draft a compromise bill, or the case is litigated absent a DOL appeal. For now, the walk away for employers is that the rule will not take effect on December 1, 2016.
For employers that were not quite ready for the new rules, this decision will provide some additional time to evaluate and plan, just in case the temporary injunction is overturned. For employers that have already made changes to employees’ pay structures, there is no legal requirement or prohibition that such changes be maintained.