On November 22, 2016, Judge Mazzant of the United States District Court for the Eastern District of Texas granted an emergency motion for preliminary injunction which temporarily halts the implement of the Department of Labor's ("DOL's") new federal overtime rule raising salary thresholds to be exempt from overtime. Twenty-one states and fifty private parties had filed suits which were consolidated into the case of State of Nevada, et. al. v. United States Department of Labor, et. al.. The Court's grant of a preliminary injunction preserves the status quo while the court determines the DOL's authority to make its final rule as well as the final rule's validity. While the grant of the preliminary injunction is not permanent, it is certainly a bad omen for DOL's implementation of the rule. It is thought that Judge Mazzant would not have granted a preliminary injunction unless, among other things, he feels that the States have shown a substantial likelihood of succeeding on their underlying claims.
Many of you have already restructured and/or re-classified your work force anticipating the looming December 1 deadline. The Court's ruling means that employers may continue to follow the existing overtime regulations until a final decision is reached. In result, the $23,660 salary threshold remains in place and the proposed $47,476 threshold will not take effect.
Where does this decision leave you, the employer? If you have already raised employees' salaries to meet or exceed the new threshold, it would seem to be a difficult management action to reverse employees' announced raises. If you had anticipated reclassifying exempt employees but have not done so, it would seem appropriate that the reclassification can be suspended. For those employees who have already been given notice that their status will be changed December 1 from exempt to non-exempt, you obviously have a more difficult decision. Your number of effected employees and their particular circumstances might provide you with guidance. While you as an employer should not assume that the proposed overtime rule will be permanently barred, at this time and with the Court ruling and the presidential administration change, it appears to have a questionable future. Should you have any questions, please feel free to call Glenn R. Davis or Andrew P. Dollman at 717-620-2424.