District Court in Texas Issues Nationwide Injunction on New DOL Overtime Rule

November 23, 2016Articles

On November 22, Judge Amos L. Mazzant, III, of the United States District Court for the Eastern District of Texas, Sherman Division, enjoined the U.S. Department of Labor ‘s (“DOL’s”) new overtime rule from taking effect on December 1, 2016. The injunction applies nationwide and affects all employers. The DOL’s rule would have raised the salary threshold for exempt administrative, professional, and executive employees from $23,660 to $47,476 per year. It would also have raised the salary threshold for the “highly compensated employee” exemption from $100,000 to $134,004. Moreover, the rule would have provided for future automatic increases to the salary thresholds. Many employers across the country have spent the last few months planning whether to raise the salaries of certain employees, or convert them to non-exempt, in which case the employees would become newly overtime-eligible.

Employers should continue such planning because the rule may still ultimately go into effect; Judge Mazzant’s ruling simply means it will not go into effect on December 1. In September 2016, two lawsuits were filed in Judge Mazzant’s court, one by a group of 21 states, and one by a group of private companies. Both lawsuits, which were eventually consolidated, challenged the constitutionality of the new rule. The states contend that the new rule constitutes executive overreach and potentially violates the 10th Amendment. Private companies argue that the DOL did not follow administrative procedures when enacting the rule.

Dinsmore & Shohl LLP will be tracking any further developments and will update its clients in the near future. If you have any questions, or need help with planning, please contact your Dinsmore attorney.