A federal district court judge in Texas has granted a preliminary injunction that temporarily blocks the Department of Labor (DOL) from implementing its regulations on exemptions from the Fair Labor Standards Act (FLSA). This is only a temporary injunction and not permanent; however, it is indefinite. The injunction prevents the regulations from going into effect on December 1, as had been scheduled.
The rule would have affected about 4 million executive, administrative and professional employees. The rule would have made them eligible for overtime for all hours worked in excess of 40 per week unless their salary was at least $913 per week ($47,476 annually). The new threshold would have roughly doubled the current amount of $455 per week ($23,660 a year).
The lawsuit was filed by the Attorneys General for Texas and Nevada and was joined by 19 other states and a coalition of over 50 business groups. The states allege that the DOL’s overtime rule is illegal because the minimum salary rule makes employees non-exempt when their duties qualify them to be exempt. The judge agreed with the states, finding that the minimum salary level is without statutory authority under the FLSA.
Employers still need to follow state rules. For example, in California the salary threshold for exempt employees remains $41,600 until January 1, 2017 when it will increase to $43,680.
Many employers have already communicated changes to employees based on the assumption that the new rules would go into effect as scheduled. It will be a difficult employee relations challenge to decide whether to go back to previous exempt-versus-non-exempt status.