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Overtime Rule Change Halted

By Sarah Baker

November 23, 2016

BREAKING NEWS:  Nov. 23, 2016.  The Fair Labor Standards Act overtime rule, which was to take effect on December 1, is officially on hold, thanks to an 11th hour ruling by a federal judge.

District Judge Amos L. Mazzant III, sitting in Sherman, Texas, issued a preliminary injunction on November 22, 2016, effectively stopping the Department of Labor’s Final Rule in its tracks, at least for the time being. If allowed to take effect, the Final Rule would require employers to increase the annual minimum salary level of “white-collar” employees – those with executive, administrative and professional functions - from $23,660 to $47,892, or else begin paying them overtime.  It is estimated that an additional four million employees would be entitled to overtime pay under the rule.  While most employers have been taking steps to ensure compliance with the rule by December 1, many held out hope for a ruling delaying the rule’s implementation.  That wish has been granted. 

The injunction stems from two lawsuits filed in September of this year by approximately twenty-one states and fifty business groups.  The lawsuits were combined in October.  In his opinion, Judge Mazzant indicated that the Department of Labor overstepped its authority by more than doubling the previous minimum salary level, and implementing a system of automatic salary increases.  Three tests must be met to qualify for a white-collar exemption: (1) salary basis, (2) salary level, and (3) job duties.  Judge Mazzant reasoned that Congress originally intended to exempt from overtime those engaged in executive, administrative and professional duties, and ruled that the significant step up in salary level rendered the Final Rule an impermissible “de facto salary-only test,” essentially negating the duties test.

Judge Mazzant also determined that he had authority to issue a nationwide injunction against the implementation of the Final Rule since it is applicable to all states.

It is important to note that this is a preliminary injunction, and not a final ruling.  But a decision on the merits of the case, and appeals of that decision which are almost certain to follow, are likely to take years.  So for now, at least, the prior salary level of $23,660 will remain in effect.

For assistance or further information, contact Critchfield, Critchfield & Johnston, Ltd. in Wooster at (330) 264-4444; in Medina at (330) 721-7644; in Millersburg at (330) 674-4469; in Mount Vernon at (740) 397-6775; or in Ashland at (419) 289-6888.   Our Internet address is ccj.com.

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