Texas Court Enjoins DOL Regulations

As we wrote about, as of December 1, 2016, new Department of Labor Regulations were to have gone into effect that would have resulted in approximately 4.2 million more workers being entitled to overtime.   As we wrote about 21 states brought suit in a Texas federal court to stop the implementation of those new regulations.  Yesterday, a Texas District Court Judge, who happened to have been appointed by President Obama, granted a nationwide preliminary injunction blocking implementation of the rule that doubled the required salary level to qualify for the Fair Labor Standards Act’s “white collar exemptions.”  As a result, the salary required to be paid to an employee to be treated as “white collar exempt” will remain at $455/week and will not be increased to $913/week.

Many employers had already prepared for the new regulations by identifying workers affected by the new rule and determining how to address the change.  Many employers gave employees raises to new salary level, hired new employees to limit overtime worked, and implemented the fluctuating workweek method of overtime calculation.  If an employer has already communicated those changes, it will be difficult to undo them. 

Employers who did not plan for the change can breathe a sigh of relief.  That relief, however, may be temporary as the Department of Labor is likely to appeal the decision to the Fifth Circuit Court of Appeals.  If the decision is reversed by the Fifth Circuit, and the employer is not in compliance with the new regulations, a difficult scenario arises:  does the reversal of the injunction mean the effective date of the regulations will be made retroactive to December 1, 2016?