HR Alert

U.S. District Court Grants Nationwide Preliminary Injunction Against New Federal Overtime Rule

Further Legal Developments May Be Forthcoming

The U.S. District Court for the Eastern District of Texas has granted a nationwide preliminary injunction against the U.S. Department of Labor's (DOL) new federal overtime rule, which was set to become effective on December 1, 2016. The injunction prevents enforcement of the final rule on a nationwide basis.

Background
Current federal rules provide an exemption from both the minimum wage and overtime pay requirements of the Fair Labor Standards Act (FLSA) for bona fide executive, administrative, and professional employees who meet certain tests regarding their job duties and who are paid on a salary basis at not less than $455 per week ($23,660 per year). "Highly compensated employees" (HCEs) who are paid total annual compensation of $100,000 or more and meet certain other conditions are also deemed exempt.

On May 18, 2016, the DOL issued a final rule updating the salary and compensation levels needed for executive, administrative, professional, and highly compensated employees to be exempt. Among other things, the final rule:

  • Raised the salary threshold from 5 a week to 3 per week (or ,476 annually) for a full-year worker; and
  • Increased the HCE total annual compensation level to 4,004 annually.

Legal Developments
Earlier this fall, a coalition of states and business groups sued the DOL to prevent enforcement of the final rule. On November 22, 2016, the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction against the implementation and enforcement of the final rule. <b>The injunction prevents enforcement of the final rule on a nationwide basis. Further guidance and legal developments, however, may be forthcoming, and will be reported on promptly</b>.

Employers with questions regarding the case's impact on workplace overtime requirements should contact a knowledgeable employment law attorney.


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