On November 22, 2016, US District Court Judge Mazzant of the Eastern District of Texas issued a preliminary injunction, temporarily barring the new Fair Labor Standards Act (FLSA) Final Overtime Rule from going into effect. The Rule, previously scheduled to take effect on December 1, 2016, would have increased the minimum annual salary that must be earned by exempt employees to $47,416 (up from $23,660). “Exempt employees” refers to employees exempt from the overtime requirements under FLSA. This Rule is now postponed until further notice pending final adjudication, appeals, etc. However, although the minimum salary increase has been postponed, the “white collar duties” tests under FLSA must still be met in order for an employee to be properly classified as exempt.

The lawsuit was filed by 21 different states and over 50 business groups. All cases were consolidated before Judge Mazzant for judicial efficiency purposes. The injunction applies nationwide, including all of those states that were not even parties to the lawsuit.

The Court ruled that the Department of Labor overstepped its boundaries in issuing the new regulation in the first place. Notwithstanding the fact that the Court deemed that changes in the Final Rule were inconsistent with the congressional intent of the existing overtime laws, Judge Mazzant further stated that any changes to the Fair Labor Standards Act must be done by an act of Congress.

Employers may now, for the foreseeable future, continue to maintain their current salary structure for their exempt employees (assuming they are not earning less than $23,660 per year) until this matter is resolved one way or another. The reality is, with the Trump administration taking over on January 20, whether the Final Rule ever sees daylight again remains to be seen. There is a strong possibility that it will not.

The case is: State of Nevada et al. v. U.S. Department of Labor, Civil Action No. 4:16-cv-00731-ALM