Federal Judge Blocks Overtime Rule From Moving Forward on Dec. 1 Start Date
On November 22, Texas U.S. Disrict Court Judge Amos Mazzant issued a nationwide temporary injunction, blocking the U.S. Department of Labor (DOL) from implementing new overtime pay rules scheduled to take effect on December 1, 2016. Twenty-one states and dozens of business groups had filed suit in the eastern district of Texas to stop DOL from implementing rules that they say would substantially increase employment costs.
On May 18, 2016, DOL issued the final version of the overtime pay rule. The rule would nearly double the threshold for exemption from overtime pay for professional employees, also referred to as "white collar" employees from $23,660 ($455 per week) to $47,476 ($913 per week). The overtime eligibility rate would also be adjusted every three years. An estimated 4.2 million workers would be impacted by the overtime rule.
Specifically, the court issued the temporary injunction due to DOL's attempt to increase salaries without consideration of an employee's duties. According to Judge Mazzant, "If Congress intended the salary requirement to supplant the duties test, then Congress, not the Department, should make the change." Although only temporary, the ruling casts doubt on future implementation of DOL's overtime pay rule. The court litigation and potential appeals process could drag into the New Year, and President-elect Donald Trump could take action to rescind the overtime pay rule, or instruct DOL not to defend. This rule is one of several that the incoming Trump administration has highlighted to roll back. Congress has already taken action to delay implementation of the overtime pay rule.
On September 28, 2016 the U.S. House of Representatives passed the Regulatory Relief for Small Business, Schools and Nonprofits Act (H.R. 6094) by a vote of 246-177. The bill would delay the start date of the overtime pay regulations for six months. The Senate has yet to schedule floor time for consideration of their companion bill, S. 3462. President Obama has threatened to veto the bill.
NACo submitted comments to DOL expressing concerns over the increased administrative and financial burden it would impose on the nation's counties, who employ more than 3.6 million people, providing services to over 305 million county residents. In June, Mineral County, Nev. Commission Chair Jerrie Tipton testified on behalf of NACo before the House Committee on Small Business on the overtime rule. Also, NACo released an "Analysis of the Impact of the U.S. Department of Labor's Overtime Rule on Counties."
NACo will continue to monitor the latest developments with the court litigation, action by Congress or the President-elect Trump administration.