Hold it, hold it, FLSA Regulations on Hold

I’m not having a very good month.  I have been just flat out wrong twice this month.  The first time was on the 8th.  And now last night.

U.S. District Court Judge Amos Mazzant last night issued a nationwide preliminary injunction blocking the Department of Labor’s new overtime regulations from taking effect on December 1. In order to get a preliminary injunction, a plaintiff must prove certain things–including that the plaintiff has a substantial likelihood of success on the merits. Without getting into all of the legal analysis, here is what matters to most of you.

Judge Mazzant found that the language of the statute was clear and that “The plain meanings of the terms in Section 213(a)(1), as well as Supreme Court precedent, affirms the Court’s conclusion that Congress intended the EAP exemption to depend on an employee’s duties rather than an employee’s salary.” As such the judge found, “With the Final Rule, the Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test.” But the Court did not stop there. Anticipating that some could argue that the language of the statute was not clear, the Court noted: “The Department has admitted that it cannot create an evaluation “based on salary alone.” Id. at 23. But this significant increase to the salary level creates essentially a de facto salary-only test.” The Court then went on to say that because the DOL had, in the Court’s opinion, exceeded its authority, the Court would not even discuss the automatic updating mechanism contained in the Final Rules.

There are a couple of things for you to remember First, this is a preliminary injunction, so at this point it is just a delay in implementation and not a final decision regarding the legality of the Final Rule. And secondly, the DOL is not likely to let this go unchallenged. In fact they issued the following statement shortly after the judge published his order: “We strongly disagree with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans. The department’s overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options.” Also, given the procedural posture of this case, it could be argued that Judge Mazzant’s order only applies to public sector employers, but by our reading, it appears to apply to ALL employers – both public and private sector – who were going to be impacted by the new regulations.

So what should you do now? We see the following options:

If you have not done anything to prepare for these changes, it looks like your procrastination has paid off (at least for now). We would still encourage you to create an implementation plan should this injunction be overturned at some point.

If you have an implementation plan that you were preparing to roll out on December 1, you can: 1) go forward with your plan since it would keep you in compliance with both current and the potential future regulations; or 2) delay your plan pending the outcome of these lawsuits. If you choose Option 2, you should consider sending a message to any and all individuals who would have been impacted by the change. We suggest something like this:

A Federal court in Texas has issued an injunction preventing the new salary rules from going into effect. This has created uncertainty as to what changes, if any, will need to be made in the future. In order to ensure that we follow the law and avoid unnecessary disruption, we are delaying the implementation of our salary changes until we have more clarity on this issue. If you have any questions, you should contact the Human Resources Department.