Judge Blocks Overtime Rule Set to Take Effect December 1
On Tuesday, November 22 a federal judge issued a nationwide injunction blocking the U.S. Department of Labor (“DOL”)
from implementing its new overtime rule scheduled to take effect December 1, 2016. The rule would have affected
approximately 4 million executive, administrative and professional (“EAP”) employees, making them eligible for timeand-a-half pay for all hours worked in excess of 40 per week if their salary is below $913 per week ($47,476 per year).
The new threshold would have doubled the current threshold of $455 per week ($23,660 per year).
The case, State of Nevada v. DOL, was presided over by Judge Amos Mazzant, an Obama appointee to the United States
District Court for the Eastern District of Texas. The lawsuit was filed by the Attorneys General for Texas and Nevada and
was joined by 19 other states. The states alleged that the DOL’s overtime rule is illegal because the minimum salary
threshold of $47,476 makes millions of EAP employees’ non-exempt when their duties clearly qualify them to be treated
as exempt.
The Court agreed, finding that the minimum salary level and the automatic updating mechanism in the new regulations
are without statutory authority under the Fair Labor Standards Act (“FLSA”). Essentially, the Court concluded that the
new rule imposed a de facto minimum wage requirement for EAP employees of $47,476, which exceeds the DOL’s
authority under the FLSA and is contrary to Congressional intent. Under the FLSA, bona fide EAP employees are exempt
from minimum wage and overtime requirements.
The decision is a blow to the president’s overtime regulation, which was intended to boost workers’ paychecks in the
face of stagnant wages. Even if the Court ultimately restores the new overtime rule, it is likely to be revised by
President-Elect Trump through additional rulemaking or legislation.
Stacy
Barrow, Esq.
Compliance
Director
About The Authors. This alert was prepared for Forum by Stacy Barrow and Mitch
Geiger. Mr. Barrow and Mr. Geiger are nationally recognized experts on the Affordable
Care Act. Their firm, Marathas Barrow & Weatherhead LLP, is a premier employee
benefits, executive compensation and employment law firm. They can be reached at
[email protected] or [email protected].
This e-mail is a service to our clients and friends. It is designed only to give general information on the developments
actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively
the subjects covered, provide legal advice, or render a legal opinion.
Benefit Advisors Network and its smart partners are not attorneys and are not responsible for any legal advice. To fully
understand how this or any legal or compliance information affects your unique situation, you should check with a
qualified attorney.
© Copyright 2016 Benefit Advisors Network. Smart Partners. All rights reserved.