U.S. District Court in Texas enjoins enforcement of new overtime rules

Wednesday, 23 November 2016

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Update to this post: On December 1, 2016, the U.S. Department of Labor filed a notice of appeal in this case. We will now have to "stay tuned" for a decision by the U.S. Fifth Circuit Court of Appeals.

Original post:

My crystal ball was broken yesterday when I predicted that a temporary restraining order (TRO) would not be issued in the Texas lawsuit involving the new overtime rules set to go into effect on December 1, 2016.

Yesterday, the court ruled that the U.S. Department of Labor (DOL) didn’t have the authority to use a salary test to determine whether an executive, administrative, or professional employee was exempt from overtime. The court found that only duties tests were applicable to determining whether an employee was exempt. I will provide a more detailed explanation of the court’s decision in a later post.

So for right now, the new overtime rules will not go into effect on December 1 unless the U.S. Fifth Circuit Court of Appeals overrules the U.S. District Court’s TRO.

So you still have to stay tuned for the latest developments while we wait for the next shoe to drop.

Download a copy of the district court’s decision in Nevada v. U.S. Dept. of Labor (4:16-cv-00731, U.S. District Court, E.D. Texas, decided on November 22, 2016).

Background

On May 23, 2016, the DOL issued a final rule to change how exemptions from overtime were to be determined. Under the current rules, an employee has to make at least $455 a week to be exempt. (This trigger or threshold amount is sometimes referred to as the salary test.) The new rule increased the threshold amount from $455 a week to $913 a week. The new rules were set to go into effect on December 1, 2016.

On October 12, Alabama and 20 other states filed suit in the U.S. District Court for the Eastern District of Texas seeking to enjoin the enforcement of the new rule. On October 14, the Plano Chamber of Commerce and 50 other business organizations also filed suit in the same court to enjoin enforcement. The court consolidated the lawsuits.

On November 22, the court issued a nationwide preliminary injunction to enjoin enforcement of the new rule.

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