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Nationwide Injunction Against DOL Rule

Sun January 1, 2017 Publications

During the week of Thanksgiving, we were busy fielding inquiries from employers about the impending implementation of the Department of Labor’s new rule requiring employers to raise the salary of most currently exempt employees to $47,476 ($913 per week) or pay these employees overtime pay for hours worked over 40 per week. This rule, which was set to go in effect on December 1, would have automatically escalated the minimum salary every three years.

The day before Thanksgiving, November 23, the salary increase was blocked when a federal district court judge in Texas issued a nationwide injunction against implementation of the rule. The judge found the department was not authorized by Congress to establish a salary-threshold test, despite the existence of this rule for many years with a much lower salary-threshold. Instead, the judge concluded that Congress had intended the white collar exemption to be based on an employee’s duties rather than the employee’s pay.

The DOL filed a notice of its appeal, but did not file a motion to stay or suspend the injunction during the appeal which could have made the rule applicable, at least for now. The department did, however, move to expedite the proceedings stating that millions of workers were being denied the extra pay to which they were entitled. The department pointed to precedent that emphasized the secretary’s “broad latitude” to define which workers qualify as exempt white collar employees, and argued that the proposed new salary level is comparable to the salary level back in 1938 when the overtime law was implemented, as in both cases the salary level is about three times the minimum wage for a 40-hour week.

Unless the motion to expedite is granted, it is unlikely that appellate briefs will be filed before Inauguration Day on January 20. If the appeal is pending at that time, there is no certainty that the new administration would continue to pursue it. Meanwhile, the nationwide injunction may further erode employees’ rights to overtime by giving employers the footing to argue that white collar exemptions are based solely on duties and the department’s current rule on a minimum salary-threshold of $455 per week cannot be enforced for the same reasons the new rule cannot be enforced – the rule is not authorized and is arbitrary and capricious, according to the judge in Texas.