WASHINGTON, D.C. (Nov. 23, 2016) — A U.S. District Court in Sherman, Texas, has issued a preliminary national injunction halting the Dec. 1 implementation of the Department of Labor's (DOL) overtime rule that would have doubled the threshold under which employees must be paid overtime.
On Nov. 22, U.S. District Court Judge Amos Mazzant granted an emergency motion for preliminary injunction and thereby enjoined the Department of Labor from implementing and enforcing the overtime final rule on Dec. 1.
Judge Mazzant's ruling was in response to two lawsuits objecting to the regulations that were consolidated in October. They were filed by the Washington-based U.S. Chamber of Commerce on behalf of more than 50 other groups and by Nevada Attorney General Adam Paul Laxalt on behalf of a coalition of 21 states.
Issued May 18, the DOL's rule calls for doubling the salary threshold at which salaried workers are entitled to time-and-a-half, to $47,776 from $23,660.
The DOL said at that time the update would impact 4.2 million workers who will either gain new overtime protections or get a raise to the new salary threshold.
Under the rules DOL proposed, employers would have a range of options to implement the rule, including:
- Raising salaries and keeping salaried employees exempt from overtime;
- Paying overtime in addition to salaries when necessary; or
- Evaluating and realigning hours and staff workload, including hiring more workers as necessary.
Small business trade associations — including the Tire Industry Association, the National Federation of Independent Business, the National Association of Manufacturers and the National Retail Federation — have panned the DOL's rule since it was issued, saying the regulation will be prohibitively expensive.
In a statement, the DOL said it “strongly disagrees” with the court's decision, noting that its Overtime Final Rule was the result of a “comprehensive, inclusive rule-making process.”
The DOL said “we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options.”
In his ruling, Judge Mazzant states it is clear that “Congress intended the (executive administrative professional) exemption to apply to employees doing actual executive, administrative and professional duties.
“In other words, Congress defined the EAP exemption with regard to duties, which does not include a mini-mum salary level.”
The final rule “is directly in conflict with Congress' intent,” according to the ruling.
National Federation of Independent Business President and CEO Juanita Duggan applauded Judge Mazzant's ruling, calling it a “victory for small business owners” that should “give them some breathing room until the case can be properly adjudicated.”
According to NFIB research, 44 percent of small businesses employ at least one person who would be eligible under the rule.
The National Small Business Association (NSBA), which has opposed the overtime rule since its inception, said it was pleased that Judge Mazzant “recognized this burden and put a hold on it — if even only temporarily.”
NSBA President and CEO Todd McCracken said, “NSBA and its members have, since day one with this regu-lation, warned regulators that the cost of compliance with this sweeping new rule would be far greater than ex-pected.”
“NSBA has strongly supported Congressional efforts to delay and halt this regulation from becoming law,” Mr. McCracken said.
“This temporary injunction, and the possibility that it ultimately will be blocked permanently sends a strong message of support and understanding of what it means to run a small business in today's economy.”