A federal judge in Texas issued a nationwide preliminary injunction that temporarily blocks the U.S. Department of Labor from implementing and enforcing its revised white collar overtime regulations. The regulatory revisions, which would more than double the minimum salary requirements for the major white collar exemptions to the federal Fair Labor Standards Act, were set to become effective Dec. 1.
Judge Amos L. Mazzant III of the Eastern District of Texas issued the ruling in a consolidated set of cases brought by 21 states, including Louisiana, and several business organizations. Both cases challenge the changes to 29 C.F.R. Part 541, which defines and delimits the standards for evaluating whether employees are exempt executive, administrative and/or professional employees. Under the current regulations, the minimum salary requirement for these exemptions generally is $455 per week, or $23,660 per year. Under the revised regulations, the minimum salary would more than double to $913 per week, or $47,476 per year.
In his decision, Mazzant found that the plaintiffs’ challenge to the final regulations has a substantial likelihood of success on the merits and that the plaintiffs would be irreparably harmed if the rule was not enjoined.
The suit against DOL challenging the overtime regulations was filed Sept. 20. A few weeks later, the states filed an emergency motion seeking an injunction to halt or delay the implementation of the new overtime regulations. Meanwhile, on Oct. 19 another lawsuit — this one brought by numerous chambers of commerce and business groups also aimed at preventing the implementation of the new regulations — was consolidated with the states’ case. Before the consolidation, the plaintiffs in the second suit had asked the court to consider a motion for summary judgment to halt the new regulations on an expedited basis. After the cases were consolidated, these plaintiffs also joined in the states’ request for a preliminary injunction.
In mid-November, Mazzant held a hearing on the preliminary injunction motion, vigorously questioning both sides and taking the matter under advisement. On Nov. 22 he granted the preliminary injunction.
The DOL is appealing the decision to the Fifth Circuit Court of Appeals, and the Fifth Circuit granted DOL an expedited appeal.
For the many employers who have been struggling to meet the Dec. 1 effective date, Mazzant’s ruling offers some welcome relief. It does not, however, provide any certainty for the future. Although the injunction halts the revised regulations from becoming effective Dec. 1, it is a preliminary injunction, not a permanent one, and it does not necessarily mean that the new rule will be gone forever, either in its current form or in some revised form under a Trump administration. It is also possible that if the court’s decision is eventually overturned, that event could lead to claims arguing that the rule should be applied retroactively to Dec. 1.
Employers who have not yet made changes should therefore continue their planning process so they can be in compliance with the revised regulations if and when they do become effective. Those who already have made changes will need to decide whether it makes business sense to suspend, alter or reverse those changes pending any subsequent legal developments. Employers should assess cost issues as well as the impact on employee morale.
Greg Guidry heads the Lafayette office of Ogletree Deakins, one of the largest employment law firms in the country.