TEXAS FEDERAL COURT BLOCKS NEW OVERTIME RULES

A Texas federal judge has barred enforcement of new U.S. Department of Labor overtime regulations that had been scheduled to become effective on December 1.

Judge Amos L. Mazzant of the U.S. District Court for the Eastern District of Texas granted the injunction on November 22 in a lawsuit brought against the DOL by 21 states and several business associations claiming, among other things, that the new regulations exceeded the DOL’s authority because they are contrary to clear congressional intent.

The Court agreed with the states’ contention that, when it passed the Fair Labor Standards Act, Congress intended for exemptions from overtime and minimum wage requirements to be based on employees’ job duties, not their salary levels. It held that the DOL had “ignored Congress’s intent by raising the minimum salary level such that it supplants the duties test.”

“The Department’s role is to carry out Congress’s intent,” the Court wrote. “If Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change.”

The new regulations, which were published by the DOL in May in response to a 2014 directive from President Obama, would have raised the minimum salary level for exempt employees from $455 per week ($23,660 annually) to $921 per week ($47,892 annually). They also contained an automatic updating mechanism that would have adjusted the minimum salary level every three years beginning in 2020.

Judge Mazzant, an Obama appointee, invalidated the automatic updating provision in a single sentence. He wrote, “Because the Final Rule is unlawful, the Court concludes the Department also lacks the authority to implement the automatic updating mechanism.”

The DOL’s own estimates had suggested that the proposed changes potentially would affect more than 14 percent of the American workforce during fiscal year 2017 and cost U.S. employers about $1.2 billion a year in “transfer of income between employers and employees in the form of higher earnings,” as well as about $295 million in “regulatory familiarization, adjustment costs, and managerial costs.”

For more than 20 years, Rodney Bean has provided practical, no-nonsense advice to help leading employers develop and apply labor and human resources strategies that are both compliant and prudent. He regularly counsels employers on most aspects of federal and state employment law, and has broad experience in wage and hour compliance and affirmative action planning.
 
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