Judge blocks new overtime pay regulations

Employers throughout America have another reason to be thankful this week as a federal judge in Texas has granted a preliminary injunction against the U.S. Department of Labor's rule that beginning December 1 would have doubled the minimum salary that "white collar" employees must earn in order to be exempt from overtime pay. Unless the November 22 ruling of U.S. District Judge Amos Mazzant is overturned or stayed by the U.S. Court of Appeals for the Fifth Circuit, employers will not have to change their compensation practices next week.

The ruling results from a lawsuit filed in September by 21 states arguing that DOL had exceeded its authority in issuing the rules and had violated federal rulemaking procedures by adopting a salary threshold that updated every three years without an opportunity for notice and comment.

Judge Mazzant ruled that Congress intended that the employees covered by the overtime rules – executive, administrative and professional workers – be defined based on their duties, not on their salary level. "But this significant increase to the salary level creates essentially a de facto salary-only test," Mazzant said. "For instance, the Department estimates 4.2 million workers currently ineligible for overtime, and who fall below the minimum salary level, will automatically become eligible under the Final Rule without a change to their duties."

Mazzant did not address the states' arguments regarding the automatic updates. "Because the Final Rule is unlawful, the Court concludes the Department also lacks the authority to implement the automatic updating mechanism. Thus, there is no need to address the State Plaintiffs’ other arguments."

Other major pieces of Mazzant's ruling were that the states would face irreparable harm if the rule is implemented and that an injunction is in the public interest. Technically, the preliminary injunction is only temporary and could be lifted following a more thorough examination. In practice, however, unless the judge's ruling is overturned on appeal the case is essentially decided because Mazzant has already concluded that the final rule is invalid.