New Ruling Halts Federal Overtime Rule

Many employers have been keeping a close watch on news regarding a new federal overtime rule since it was announced some time ago. A Texas Federal Court’s ruling this week has put at least a temporary halt on this rule before it has even been implemented. The rule, which was supposed to go into effect on December 1, could have extended overtime pay to about 5 million workers across the country. The Texas court ruled in favor of a preliminary injunction on this rule, which prohibits the Department of Labor from enforcing it. Diane M. Perri Roberts, an attorney who represents clients in business litigation and employment matters at Lipsitz Green Scime Cambria, spoke to the Buffalo Law Journal about the decision and what it means for employers going forward. The full story is available on the Buffalo Law Journal website.

Nationwide injunction granted

According to the Buffalo Law Journal, the new federal overtime rule included a white-collar exemption which would have approximately doubled the minimum salary necessary for exempt employees from $455 a week to $913 a week. In addition, employers would have been required to pay time and a half for overtime, defined as more than 40 hours worked in a week, for non-exempt employees whose annual salaries are $47,476 or less. The Buffalo Law Journal reports that 21 states sought an injunction against this rule. The Department of Labor argued that, if the injunction is granted, it should only be for the states that sought the suit. The Court, however, concluded that the Department of Labor does not have the authority to require white-collar exemption employees to be paid a minimum salary or to implement an automatic indexing mechanism for salary level. The Texas court granted a nationwide injunction, which it says “protects both employees and employers from being subject to different category exemptions based on location.”

How employers should proceed

With this new decision in place, many employers are wondering how they should proceed now that the December 1 start date has been postponed indefinitely. Ms. Perri Roberts told the Buffalo Law Journal that, if employers have already made changes based on the rule, they should go forward with the plans they have made. “If they’ve already gone through the effort, don’t turn around to make changes and add to a lot of confusion and, perhaps, morale issues,” she said.

“For example, if an employer has raised an employee’s salary up to $47,476 to comply, to now turn around and lower it to the prior number is probably not going to go over well,” she continued. Ms. Perri Roberts went on to say that, if no plans have been made to address the rule, changes do not have to be implemented in December. “I recommend, if you haven’t taken action yet, stay calm, you’re safe in not enacting the rule,” she told the Law Journal.

Injunction avoids varying national guidelines

Regarding the Department of Labor’s request that the injunction only be applied to those 21 states that sought it, Ms. Perri Roberts told the Law Journal that “the judge addressed the scope and said that it is proper because the final rule is applicable to all of the states, not just the ones that challenged.” She went on to say that “what they were trying to avoid was having 21 states having their employees be considered a particular way under the exemptions versus the other 29 states having a different set of guidelines applying to their employees.”

Ms. Perri Roberts told the Buffalo Law Journal that the Department of Labor may try to get an emergency appeal to the Circuit Court of Appeals before December 1 and that the case may be moved along quickly to decide on whether a permanent injunction is appropriate.

About Diane M. Perri Roberts

Diane M. Perri Roberts is Special Counsel in Lipsitz Green Scime Cambria’s Business Litigation Practice Area. She represents businesses in contract disputes and employment matters in federal court, state court, mediations, and arbitrations. She defends employers in labor matters brought before various entities, including the EEOC, OSHA, and the New York State Division of Human Rights. Ms. Perri Roberts also counsels business owners and employers on management and labor issues.


This article does not purport to give legal advice and is for informational purposes only.