Insights: Article

Judge Delays New Salary Level Threshold for Overtime Pay

November 23, 2016

Earlier this year, the U.S. Department of Labor (DOL) released the Final Rule updating its overtime regulations. The Final Rule more than doubles the current salary level threshold for certain salaried executive, administrative, professional and computer employees to be exempt from overtime pay under the Fair Labor Standards Act.

Effective Dec. 1, 2016, the Final Rule increases the salary level threshold for these employees to be exempt from overtime pay from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). The DOL estimates that 4.2 million U.S. workers previously considered exempt from overtime will no longer be exempt on Dec. 1 as a result of the rule.

In October, 21 states filed a request for a preliminary injunction challenging the Final Rule with the U.S. District Court for the Eastern District of Texas (Sherman Division). Arguments were heard in November, and on Nov. 22, 2016, Judge Amos L. Mazzant III granted the preliminary injunction.

This action by Judge Mazzant effectively delays implementation of the Final Rule and allows time for further court hearings. The injunction also provides time for the new administration under President-elect Donald J. Trump to review and possibly revise the Final Rule or for the new Congress to enact legislation overriding it. The DOL is considering legal options, such as appealing the ruling. But the appeal would face an uphill battle in the conservative Fifth Circuit.