Texas court stops DOL effort to expand overtime

The November 22 ruling by a Texas federal court delays implementation of the U.S. Department of Labor’s (DOL) new regulations which would have increased the number of employees entitled to overtime pay. In fact, the court’s decision calls into question whether the proposed overtime changes will ever go into effect.

The DOL’s proposed regulations doubling the salary threshold necessary for an employee to remain exempt were scheduled to go into effect on December 1, 2016. It was estimated that more than 4.2 million employees who had not been entitled to overtime pay would begin earning overtime pay after the change. This dramatic increase in wage costs for employers caused 21 states to file a lawsuit with the U.S. District Court for the Eastern District of Texas seeking to stall or derail the change in overtime laws. On Tuesday afternoon, Judge Mazzant agreed with the states and found the DOL did not have the statutory authority to expand overtime obligations for employers. The Texas court issued a nationwide injunction blocking the new overtime regulations.

The court’s ruling means that employers do not need to make the December 1, 2016, changes to overtime pay for employees that had been planned. Nonetheless, this is still a good time for employers to conduct a self-audit to make sure their employees are properly classified as exempt or non-exempt under the existing law.

As always, we stand ready to assist you in managing this issue and determining the right course of action for your particular business. Please contact your labor and employment attorney at McAfee & Taft with any questions you may have, and we’ll keep you informed as this matter develops.