Texas Court Halts DOL Overtime Rule Nationwide

On November 22, a federal judge in Texas provided a nationwide preliminary injunction preventing the Department of Labor (DOL) from implementing its new overtime rule. The rule would have raised the salary threshold used to determine employees who are eligible for overtime from $23,600 annually to $47,476 annually, and established a mechanism for automatically increasing the threshold every three years.

Judge Mazzant, an Obama appointee, cited direct conflict with Congressional intent of the Fair Labor Standards Act (FLSA), which clearly refers to workers’ duties, not their salaries, in the exemption for the executive, administrative and professional employees. According to the court, since the rule is unlawful, the DOL also lacks authority under the FLSA to implement the automatic escalator.

The decision came just days before the December 1, 2016 implementation date as employers – large and small, public and private – were preparing for compliance. Further proceedings to convert the preliminary injunction to a permanent injunction have not yet been scheduled and may not be if the final ruling of the court proceeds through motions. Yesterday, the Justice Department filed an appeal with the traditionally conservative Fifth Circuit U.S. Court of Appeals. The appeals process is likely to roll into the new administration, and a DOL that is expected to be more business-friendly.

Although it is possible that a final resolution of the case could occur before the new administration, it may be resolved in the beginning of the 115th Congress, through the Congressional Review Act (CRA). The CRA gives Congress 60 legislative days to undo executive branch regulations through the passage of a joint resolution of disapproval. Since passage of a CRA would require the signature of the President – or two-thirds of Congress to override a veto – they are usually rendered ineffective unless the 60 day window allows for the CRA to rollover into a new administration with a President-Elect more favorable to signing the joint resolution of disapproval. Whether the overtime regulation is eligible for the CRA will depend on if Congress adjourns before the 60 legislative days are met.


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