In a down-to-the-wire decision, a Federal judge in Texas has granted a preliminary injunction against the FLSA overtime threshold changes, originally scheduled to go into effect on December 1st. In issuing the injunction, the court concluded the Fair Labor Standards Act “does not grant the Department the authority to utilize a salary-level test or an automatic updating mechanism under the Final Rule.”
The impact is twofold:
- For now, employers have no burden to make adjustments to the pay of exempt employees; however, the Department of Labor may appeal and implementation may occur down the road.
- The incoming Trump Administration now has more time to make changes and potentially end the rulemaking permanently, or issue a new rule with a salary threshold different than what was initially proposed.
Fear regarding implementation costs for employers (especially small businesses) as well as the automatic increases at intervals included in the rule led twenty-one states (including Kentucky) to file the lawsuit that resulted in the injunction. There is not yet any information available on next steps or timelines related to the future of the regulation.
For more information, check out the following articles:
The National Law Review: Overtime Regulations Put On Hold