November 23, 2016

New Federal Overtime on Hold



In a surprise pre-Thanksgiving bombshell, the federal district court for the Eastern District of Texas granted a preliminary injunction halting implementation of the new federal overtime rule raising the threshold salary required to make certain employees exempt from overtime.  The new overtime rule, which was scheduled to go into effect December 1, 2016, would have raised the minimum salary threshold from $23,600 to $47,476.  However, the ruling blocks implementation of the rule while the court considers whether the Department of Labor had sufficient authority to make the rule.

Given this ruling, as of now employers are not required to increase the minimum salary paid to exempt workers to preserve their exempt status above the previous $455 per week amount.  However, employers should not read too much into the ruling.  A preliminary injunction is merely a temporary hold on implementation of the rule to “preserve the status quo” while the law is evaluated.  The decision does not permanently prevent implementation of the rule and it very well could be implemented at a later date after the court concludes its evaluation.  In addition, the Department of Labor has the option of appealing the decision to the Fifth Circuit Court of Appeals, and appears likely to do so.


If you have already taken action and provided salary increases to employees to implement what was to be the new $913 weekly minimum amount, it may be difficult to roll back those changes now.  However, any decisions that have not yet been made can be delayed while the litigation continues.  Again, employers must keep in mind that this decision is temporary and does not mean that the increases will not be implemented at a later date.  Preparations should therefore be in place to put any increase into effect when and if the increases are found legal.

Jordan Ramis will continue to keep you apprised on any new developments as the rule works its way through the court system and will certainly update you when a final decision is made.  In the interim, please do not hesitate to reach out to us if you have any additional questions or need further guidance.

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