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Texas Court Blocks Overtime Eligibility

By Lorena E. Ahumada

A Texas federal judge entered a nationwide injunction last week, preventing the U.S. Department of Labor (DOL) from implementing new regulations that would have expanded overtime eligibility for an estimated 4 million workers. The regulations, which were scheduled to take effect on December 1, 2016 would have overhauled the overtime exemption rules and salary threshold provisions of the Fair Labor Standards Act (FLSA) by increasing the salary threshold for the “white collar” exemptions from $23,660 to $47,892 and adding a new automatic salary updating provision to raise this threshold every three years. Thus, under the new rules, an employer would have had to pay overtime to any employee making less than $47,892 even if the employee’s job duties met the FLSA exemption test. Agreeing with the State of Nevada and 20 other state plaintiffs, the federal court found that the DOL did not have statutory authority to amend the federal overtime laws in this manner.  Because the DOL regulations were set to take effect nationwide, the Texas court further reasoned that a nationwide injunction was appropriate to bar the implementation of the new overtime regulations.

This 11th-hour ruling and questions about the incoming Administration’s policy changes have left employers scratching their heads.  Indeed, in anticipation of the new rules, many employers have already started making workforce adjustments, including increasing pay and decreasing work hours.  With the injunction in place, however, these early preparations may have been for naught.  Further, since this is a preliminary injunction, it may be lifted at any time by the Texas federal court or on appeal to a higher court.

Kleinbard’s employment attorneys are here to assist employers as they navigate these complicated FLSA changes and rollbacks.  For more information please contact Lorena E. Ahumada at lahumada@kleinbard.com.