COMMENTARY: Nationwide injunction halts overtime expansion

By James B. Perry

Public and private sector employers all over the country can breathe a sigh of relief due to Federal District Court Judge Amos Mazzant’s ruling on Nov. 22, which granted a Preliminary Injunction blocking the Department of Labor (“DOL”) from increasing the minimum salary required to make an employee exempt from the Fair Labor Standards Act as a Professional, Executive, or Administrative employee (the white collar exemptions). This is significant since employees who are not exempt from the Fair Labor Standards Act must be paid time and one half for all hours worked over 40 in a workweek.

Judge Mazzant’s ruling means that the current regulations, including the minimum salary threshold for the white collar exemptions, remains $455 per week. Judge Mazzant emphasized that Congress defined the exemptions with regard to the duties performed by those who are exempt, not through a salary requirement. This Preliminary Injunction merely maintains the status quo while the court decides the actual validity of the new rule. Judge Mazzant pointed out that failing to grant the Preliminary Injunction could cause irreparable harm to the states and business groups that filed the case, since complying with it would be very costly and those costs could not be recovered if they ultimately proved that the rule was invalid.

Employers cannot necessarily assume that the new rule will be permanently barred. However, if there is no ruling on the merits before Jan. 20, 2017 and the Preliminary Injunction remains in place, it will be up to the DOL under President Donald Trump to decide whether to move forward with propagating and defending the new rule. In the interim period, the current DOL expressed its disagreement with Judge Mazzant’s decision and announced that it is considering all legal options. One option could be an immediate appeal of the decisions to the Fifth Circuit Court of Appeals.

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James B. Perry is a member in Dickinson Wright’s Detroit office. He can be reached at 313-223-3096 or jperry@dickinsonwright.com.