FLSA Overtime Rules Blocked. Now What?

Ten days before new federal regulations raising the salary threshold for exemption from overtime pay from $23,660 to $47,476 were to go into effect, Federal District Judge Amos Mazzant of the United States District Court for the Eastern District of Texas granted a preliminary injunction that temporarily halted the increase.

Twenty-one states filed suit to block the increases in a case styled State of Nevada, et al v. United States Department of Labor, et al, Civil Action No.: 4:16-CV-0073. Judge Mazzant found that “29 U.S.C. § 213(a)(1) does not grant the Department [of Labor] the authority to utilize a salary-level test or an automatic updating mechanism under the Final Rule.” State of Nevada v. United States Department of Labor at 19.

Does my church or non-profit still have to do anything by the December 1 deadline?

The short answer is no. For now, the Fair Labor Standard Act’s (“FLSA”) overtime rule will not take effect as planned on December 1, so employers may continue to follow existing overtime regulations until the injunction is lifted or changed.

Is this a final decision that permanently puts an end to the rule?

No. The overtime rule may still end up being implemented at some point in the future. A preliminary injunction is not permanent. A preliminary injunction simply preserves the status quo until the district court has the time to review the merits of a case. The court may find in favor of the Department of Labor even though the rule was enjoined. However, in order to grant a preliminary injunction the district court had to find that the challenge to the rule had a substantial likelihood of succeeding on the merits.

Either way, it is likely that the decision will be appealed to the United States Fifth Circuit Court of Appeals by the side that loses at the district court level. The Department of Labor has stated that it is considering all of its options.

Does this rule apply nationwide?

Yes. The ruling applies to all state in order to protect both employees and employers form being subject to different exemptions based on their location. Id. at 18.

What if my organization has already implemented changes based on the anticipated rules?

Each organization will have to make its own decision, but if an organization has already provided salary increase to employees in order to maintain their exempt status, it may be difficult to walk that back. However, if the salary increase or reclassification has not yet occurred, the church or non-profit may want to simply postpone those decisions until the litigation has had a chance to play out.

Either way, employers should be prepared to make changes based on the outcome of the matter. 

Shoot Grant Reynolds an email at Grant@ReynoldsLawGroup.net or give us a call at 757-219-2500 for a free strategy session to find out your legal risk.