In a last-minute, and therefore surprising, decision issued today, a Texas Federal District Court judge has blocked enforcement of the revised federal overtime rule set to become effective December 1, 2016. The rule, issued by the federal Department of Labor, would require employers to pay a salary of at least $913 dollars per week (equivalent to $47,476 per year), to most employees treated as exempt from overtime pay under the Fair Labor Standards Act, a significant increase over the current $455 per week ($23,660 annually). The ruling came in response to cases filed in the last several weeks by certain groups of states, and the decision to issue the injunction has surprised some commentators.
Despite being issued by a single Texas trial court judge, the injunction ostensibly has nationwide effect, and completely prevents the DOL from enforcing the revised rule, just days before it was scheduled to take effect. It remains to be seen whether an immediate appeal will follow, and ultimately whether the injunction will be upheld. Employers that have not already implemented changes to employee pay or classifications will need to make decisions regarding whether to go ahead with changes in the face of this uncertainty. We will continue to provide updated analysis and will be available in the coming days to discuss these developments with any clients seeking guidance in making these decisions.