UPDATE: Department of Labor Appealing Ruling to Block Overtime Pay Rule

02 Dec UPDATE: Department of Labor Appealing Ruling to Block Overtime Pay Rule

In our last blog post, New Overtime Rule Blocked by Texas Federal Judge – What Does This Mean for Employers?, we discussed the new Overtime Final Rule that the US Department of Labor is implementing and the decision of a Texas judge to block the Rule.

This new Rule, if implemented, will require employers to pay overtime to any employees paid less than $47,476 per year (the previous rule had set the bar at $23,660). The Rule was published on May 18, 2016. The Department stated that the Rule would not go into effect until December 1, 2016, to provide businesses with time to change their policies.

The Rule was challenged in court by 21 states and several businesses. A federal district court judge in Texas blocked the rule from coming into effect, stating that the rule was unlawful and that Congress was reaching beyond its powers in enacting the new Rule.

The Update

The Department of Labor filed a notice of appeal on Thursday, Dec. 1, with the Fifth US Circuit Court of Appeals. The Department has stated that it strongly disagrees with the decision of the district court and will consider all of its legal options for enforcing the Rule.

 

Does This Mean the Rule Will or Won’t Go Into Effect?

The block by the district court is only a preliminary injunction until the case can be litigated on its merits. Even if the Department of Labor loses the appeal and the preliminary injunction stays in place, the parties still have to litigate the case on the merits.

After the parties have finished litigating the issues of the preliminary injunction, they will need to go into a much more in-depth litigation as to whether the Rule is unlawful. Once an outcome has been reached based on the merits, that outcome will either:

  • Provide for a permanent injunction, prohibiting the Rule from ever going into effect, or
  • End the temporary injunction and allow the Rule to go into effect.

What This Means for Employers

For employers out there, the decision of the district court to block the Rule still stands, and the Rule is not in effect. There are still a lot of upcoming court battles to determine if and when the Rule will go into effect. Right now, employers can choose to follow the new Rule or to wait for the final court decision to see if the Rule will stand.

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