Updated: November 30, 2016
On Tuesday, November 22, a federal judge in the U.S. District Court for the Eastern District of Texas issued a ruling that bars — at least temporarily — the new U.S. Department of Labor (DOL) overtime rule from going into effect in all 50 states. The judge’s ruling stops implementation of the new overtime regulations until the courts reach a final decision on their legality. Legal experts have stated that the issue could be tied up in the courts for months, especially if the Obama administation decides to appeal the distict court’s ruling, as reported by Fortune.
A number of retail trade associations hailed the November 22 ruling. In a statement, David French, senior vice president for government relations for the National Retail Federation, noted, “The Labor Department’s overtime changes are a reckless and aggressive overreach of executive power, and retailers are pleased with the judge’s decision. The rules are just plain bad public policy, and we are pleased that the judge is allowing time for the case to go forward before they can go into effect. We hope the judge ultimately finds in our favor, and in the meantime this timeout gives Congress a chance to take another look at the impact of these rules.” NRF was one of more than 50 business organizations that challenged the new DOL overtime rule.
The rule, which had been set to go into effect December 1, had clarified which workers qualify for an exemption and declared that any worker who makes less than $47,476 per year or $913 per week is eligible for overtime if they work more than 40 hours per week, regardless of job title or description. The previous threshold had been $23,660 per year or $455 per week.
As to what happens next, the preliminary injunction ordered by the court must first become an official junction, as reported by Fortune. This means there will be additional court hearings within the next 60 days. Moreover, the Obama administration may choose to appeal the court’s ruling, and the DOL has already stated publicly that it disagrees with the court’s ruling and is considering its legal options. However, even if the case were expedited, an appeals court review could take months. Legal experts told Fortune that they expect the appeals court to uphold the lower court ruling, though nothing should be “taken as a given.”
The federal injunction came as a result of a legal challenge from 21 states, led by Nevada, and the U.S. Chamber of Commerce. The legal effort is seeking to bar the overtime rule and to stop the automatic increases that are scheduled to occur every three years. In their challenge, the retail trade groups argued, among other things, that the significant costs associated with implementing the overtime regulations would cause irreparable injury, as well as negatively impact the budgets of governmental programs and services.
In his ruling, Judge Amos L. Mazzant III found that the DOL exceeded its authority when it increased the minimum salary level. “While this explicit delegation would give the Department significant leeway to establish the types of duties that might qualify an employee for the exemption, nothing … indicates that Congress intended [DOL] to define and delimit with respect to a minimum salary level,” the ruling stated. “[DOL]’s role is to carry out Congress’s intent. If Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change.”