On November 22, the United States District Court for the Eastern District of Texas issued an injunction blocking the Obama administration’s new overtime exemption rules. The new rules would have gone into effect on December 1, 2016, but were being challenged in federal court by several states and private groups.
The new rules would have, among other things, doubled the annual salary threshold required to qualify for certain professional, administrative and executive exemptions to overtime and minimum wage to over $47,476 ($913 a week). In addition, the rules would have adjusted that threshold automatically every three years based upon the 40th percentile of weekly earnings in the lowest wage region of the country. The adjustment mechanism would have made the exemption a moving target for employers and complicated the classification of some employees who are compensated at or near the threshold.
The Court issued a nationwide preliminary injunction which effectively puts the new rules on hold for the time being. The Court held that the new salary level and automatic updating mechanism were without statutory authority. While this injunction is preliminary, and the legal action will theoretically continue until a final ruling is made, it is clear that, for the time being at least, the rules will not kick in on December 1.
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This material is not intended as legal advice and is for general informational purposes only. Those seeking legal advice should consult directly with legal counsel regarding their specific facts and circumstances.