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DOL Overtime Pay Rule Changes Blocked

As a result of a federal court ruling, businesses will not be required to implement the new Department of Labor (DOL) salary rules for exempt employees on December 1, 2016. 

The rule, which would have more than doubled the minimum salary requirement for exempt employees, was challenged in a U.S. District Court and the Court issued an injunction on Tuesday, November 22.

In two separate complaints, a group of twenty-one states and a coalition of business groups filed emergency motions on October 12, 2016 requesting to temporarily stop the DOL rule from becoming effective while the legal cases are pending.  

The states claimed the DOL exceeded its authority by mandating an increased minimum salary threshold and business groups alleged the amount of the increased threshold violates the Fair Labor Standards Act (FLSA). Further to their argument was that the automatic increases are unlawful. 

A hearing on the states’ issues was held November 16 and on November 22 the U.S.. District Court issued a nationwide injunction stopping the DOL’s implementation of the rule.

While this is only a preliminary (not permanent) injunction, it does delay the December 1 implementation date for all businesses. The U.S. District Court will make a final determination on the merits at a later, unknown date. 

At this time, no changes to employee exemption statuses and/or salaries are required by law, however, businesses should not assume a permanent halt on the overtime rule. Companies should closely monitor the court case, the DOL’s response and potential actions announced by the president-elect and have a plan to move forward in the future.