On May 18, 2016, President Obama and the Department of Labor released a Final Rule updating federal overtime regulations. The key provisions were detailed on the BurnBarton blog here, but most notably, the Rule more than doubled the salary threshold for “white collar” workers—from $455 to $913 per week (equaling $47,476 annually).
In a stunning turn of events, a federal district court has issued a preliminary injunction blocking implementation of the rule that had been set to become effective on December 1, 2016. The injunction resulted from a lawsuit filed by twenty-one states whose employees are covered by the federal overtime requirements. The court ruled that the Department of Labor exceeded its statutory authority in enacting the overtime rule, and based on the potential for irreparable harm (and the plaintiffs’ likelihood of success on the merits), the court expanded the scope of the injunction to all public and private sector employers nationwide.
Although the Final Rule’s requirements are merely suspended rather than defeated, the future of employers’ overtime obligations is uncertain. Regardless of the ultimate result of the litigation, the incoming presidential administration could propose alterations or new regulations that would lower the salary threshold—or replace the overtime rule entirely. We will update the blog as developments occur.
Many employers have already announced or implemented salary increases or reclassification of employees in response to the Final Rule; some are now reconsidering or even reversing those actions. If you would like help deciding how to proceed in light of potential contractual or employee-relations consequences, please give any of the attorneys at BurnsBarton a call.