November 22, 2016

On Nov. 22, 2016, a federal judge in Texas issued a preliminary injunction, halting the enforcement of the Department of Labor’s (DOL) new overtime rule nationwide until further notice. The rule, which was set to take effect on Dec. 1, 2016, would have increased the salary threshold for the “white collar overtime exemptions" from $23,660 per year to $47,476 per year.


What Is the Future of the Overtime Rule?

The DOL may be facing an uphill battle in implementing changes to the overtime exemptions. Despite this, supporters of the rule remain committed to what they describe as fair increases in the overtime exemption salary threshold.


The DOL has filed a motion for an expedited appeal of the Nov. 22 injunction. The court process, though, is lengthy and it is unclear whether or not the appellate court will make this case a higher priority than others. This means that a final court decision could take months and will probably not be made by Inauguration Day. If a decision is not made on the overtime rule by the time Trump is inaugurated, he may request the DOL to withdraw its appeal.


In the event that the DOL is successful in its appeal, it is possible that the state plaintiffs who are involved in the court case could file a petition to be heard by the full circuit, which could delay the court’s order. It is also possible that Trump could take executive action to block or amend the rule, but it is not clear at this time what approach he would take to change or undo the rule. If the appellate court strikes down the rule, though, further court or executive action would not be necessary.


What Does This Mean for Employers?

The judge’s ruling gives employers across the country a reprieve from having to raise salaries for exempt employees to the new threshold or pay them overtime.


Employers that have already made adjustments to comply with the new rule may find it difficult to reverse any changes. However, employers may decide to postpone any changes that have not yet been made.


Employers should continue to watch for new developments related to the overtime rule, as some uncertainty remains. Until a final decision is reached in the case, employers can rely on existing overtime exemption rules.

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