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Court Rules "White-Collar" Overtime Rule Unlawful; DOL Files an Appeal

On November 22, 2016, a federal court in Texas issued a nationwide preliminary injunction blocking the Department of Labor (DOL) from enforcing the new federal overtime rule which was set to take effect on December 1, 2016.

The federal overtime rule has been controversial, as it more than doubled the current federal salary level that must be met before an employee can be classified as exempt from overtime under one of the so-called white-collar exemptions (the executive, administrative and professional exemptions).

The federal overtime rule required a minimum salary of $913 per week (up from $455 per week). A group of states joined forces on a lawsuit to stop the overtime rule prior to the rule’s effective date. The lawsuit claimed that the DOL overstepped its authority in enacting the rule. Business groups also brought a lawsuit challenging the rule. The court's decision was a victory for the states and business groups who had filed suit.

In granting the preliminary order to halt the rule, the court wrote that the states showed a “likelihood of success on the merits” of the lawsuit “because the Final Rule exceeds the Department’s authority.” For now, the rule is stopped while the litigation continues.

On December 1, 2016, the DOL and its co-defendants filed a notice of appeal of the preliminary injunction in the same federal court in Texas. The overtime rule remains halted while the litigation continues.

UPDATE 9/20/2017: On August 31, 2017 U.S. District Judge Amos Mazzant officially concluded that the FLSA overtime rule is invalid. This decision stemmed from a lawsuit brought forth last year. That lawsuit created a nationwide injunction for all employers blocking the Department of Labor (DOL) from implementing the new exemption rule that was intended to take effect on December 1, 2016. What does this mean for employers? Nothing has changed. This latest development doesn’t change the current course of action employers have already taken in response to last year’s injunction. Employers should continue to update their job descriptions and ensure that their jobs meet one or more of the FLSA’s "white collar" duties tests (Executive, Administrative, Professional, Computer and Outside Sales). The DOL is focusing its efforts on further rulemaking. In fact, the DOL has recently issued a "request for information" (RFI) asking the public for input to help guide them in potentially creating new rules.

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