District Court Halts Overtime Rule

A U.S. District Court issued an injunction halting the implementation of the Department of Labor’s overtime rule. 

On November 22, the U.S. District Court for the Eastern District of Texas issued an injunction halting the implementation of the Department of Labor (DOL)’s final rule which would increase the salary threshold under which workers would be eligible for overtime benefits. The rule was initially set to become effective on December 1, 2016; it will now remain on hold pending further legal developments. The injunction order specifies that the injunction is nationwide.

U.S. District Judge Amos Mazzant, in Sherman, Texas, agreed with 21 states and a coalition of business groups, including the U.S. Chamber of Commerce, that the rule is unlawful and granted their motion for a nationwide injunction. The rule would double to $47,500 the maximum salary a worker can earn and still be eligible for mandatory overtime pay. The rule would have a substantial impact on Medicaid home care service wages, and in recognition of this impact, DOL included a temporary non-enforcement policy of the rule for Medicaid providers of ID/DD services in residential homes or facilities with fewer than 15 beds.

Mazzant ruled that the federal law governing overtime does not allow DOL to decide which workers are eligible based on salary levels alone. He wrote that “it is clear Congress intended the EAP [executive, administrative, and professional] exemption to apply to employees doing actual executive, administrative, and professional duties. In other words, Congress defined the EAP exemption with regard to duties, which does not include a minimum salary level.”

The Labor Department can appeal to the 5th U.S. Circuit Court of Appeals, but has not yet decided whether to do so. President-elect Donald Trump signaled during his campaign for President that he would rescind the rule.