Federal Court Blocks Overtime RuleNovember 23rd, 2016 by Editor
A federal judge recently issued a preliminary injunction stopping the U.S. Department of Labor’s (DOL) Overtime Rule from taking effect nationwide on December 1.
The injunction means that the rule won’t go into effect until the case is resolved or the injunction is lifted by the judge. The DOL will likely appeal the injunction.
“We strongly disagree with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans,” the DOL said in a statement. “The department’s overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options.”
Currently there is no timeline for the case to move forward.
The emergency motion for a preliminary injunction was filed on October 12 by 21 states. They claimed the DOL exceeded its authority by raising the salary threshold too high and providing automatic updates to the threshold without input from businesses that will be affected by it. The case was consolidated with another lawsuit brought by 50 business groups, including the U.S. Chamber of Commerce and National Association of Manufacturers, which raised similar objections.
As part of the final rule, the salary level under which employees qualify for overtime pay would have increased from $455 per week ($23,360 annually) to an estimated $913 per week ($47,476 annually). In addition, the rule would have provided for automatic updates to the threshold every three years.
The National Lumber and Building Material Dealers Association (NLBMDA) issued a statement in support of what it called the “prudent action” taken by Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas.
“NLBMDA welcomes the preliminary injunction to DOL’s Overtime Rule,” said Jonathan Paine, NLBMDA president and CEO. “The rule in its current form would have had many unintended consequences reducing flexibility and advancement opportunities for employees.”
Earlier this year, NLBMDA met with the White House’s Office of Management Budget (OMB) Office of Information of Regulatory Affairs (OIRA) to point out that changes in the number of employees eligible for overtime pay failed to consider regional differences. NLBMDA, through its participation in the Partnership to Protect Workplace Opportunity, has continued meeting with lawmakers seeking a legislative solution to the regulation.
William R. Carteaux, the president and CEO of SPI: The Plastics Industry Trade Association, also praised the decision.
“Government works best when we can work together to find solutions that help workers without putting their livelihoods at risk by overburdening companies,” he said. “The Department of Labor’s overtime rule would’ve harmed both plastics companies and their employees by imposing unnecessary administrative burdens and dramatic increases in operating costs. SPI applauds the court’s decision to block implementation of the rule, and looks forward to working collaboratively with Congress and the next administration to enact sound, pro-manufacturing policies that benefit both businesses and American families.”
However, a lawyer who represents a group that helps run trade associations said the ruling could disrupt some workplaces.
“This is an unexpected curve ball thrown at employers who made changes in anticipation of the overtime rule becoming effective,” said Hugh Webster, a partner with Webster, Chamberlain, Bean, LLC in Washington, D.C., the legal counsel for the Association Management Companies Institute (AMCI). “One option for employers is to shelve those changes (e.g., salary raises, job reclassifications, time keeping procedures) indefinitely, pending further direction from this court (or an appeals court). Certainly it would make sense to hold off on any reclassification of an employee from exempt to nonexempt that had been planned due to the new overtime rule’s increased salary threshold.”
Webster says it’s unclear what will happen with the overtime rule
“This judge could later decide that the rule is valid; the injunction he issued this week is not a final decision on the merits,” he said. “Or, a court of appeals could reverse the judge. But it is also unclear whether Departments of Labor and Department of Justice officials will seek an appeal with only weeks left to go in the current administration. Political observers have speculated that the incoming administration would not pursue an appeal of the judge’s ruling. There are also bills pending in Congress to delay or modify the new overtime rule, which, if passed by Congress, may be viewed more favorably by the incoming administration.”
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