Court Enjoins Implementation of Overtime Regulation

Court Enjoins Implementation of Overtime Regulation

On May 23, 2016, the Department of Labor’s Wage and Hour Division published a final rule in the Federal Register that updated the Overtime Regulations under the Fair Labor Standards Act (FLSA), specifically the exemptions for executive, administrative and professional employees.  The final rule implemented a 2014 Presidential Memorandum directing the Department to update and modernize these regulations.  

On November 22, 2016, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction, which temporarily blocks the entire Final Rule on a nationwide basis until the court makes a final decision.  The Final Rule was scheduled to take effect on December 1. The final rule raised the salary threshold for those eligible for this overtime exemption to $47,476, which would have made over 4 million workers eligible for overtime pay of time and a half for hours worked over 40 hours.

On September 4, 2015, Advocacy submitted a formal comment letter to the Department of Labor citing small business concern that increasing the salary threshold and the number of workers eligible for overtime pay would add significant compliance costs and paperwork burdens, particularly in low wage states. Advocacy recommended that DOL consider adopting a regional wage rate to reflect low wage regions, provide more compliance time for small businesses, not adopt changes to the duties test under the FLSA, and to reconsider yearly updates to the salary threshold. As a result of the letter, the final rule was modified to reflect some of the concerns as expressed by Advocacy and the small business community.   

The Court Order can be viewed here.

The Advocacy comment letter can be viewed here

If you have questions please contact Advocacy, Advocate Janis Reyes at janis.reyes@sba.gov.

Date: 
Monday, November 28, 2016