Tuesday, November 22, 2016

BREAKING: Federal judge grants nationwide preliminary injunction against FLSA overtime rule

Consider this the judicial equivalent of a Hail Mary, or full-court buzzer beater, or a bottom-of-the-9th, 2-out grand slam.

Judge Amos L. Mazzant III of the U.S. District Court for the Eastern District of Texas has just issued a preliminary injunction enjoining the DOL’s impending December 1 change to the FLSA’s white-collar salary test.

Many employers and business advocacy groups had held out hope for an 11th hour reprieve from the new overtime rules via two lawsuits filed in late September. Their (our) wish has been granted.

Essentially, Judge Mazzant (who just made every business owner’s and management-side lawyer’s holiday card list) said that he is not required to give any deference to the new regulations because the new, higher salary level improperly swallows the rest of the exemption test and makes salary alone dispositive on the issue of exemption qualification.
To be exempt from overtime, the regulations require an employee to (1) have EAP duties; (2) be paid on a salary basis; and (3) meet a minimum salary level. The Final Rule raises the salary level from $455 per week ($23,660 annually) to $913 per week ($47,476 annually).… The Department has admitted that it cannot create an evaluation “based on salary alone.” But this significant increase to the salary level creates essentially a de facto salary-only test. 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.… Congress did not intend salary to categorically exclude an employee with EAP duties from the exemption
The deeper, and more important question, is what does this ruling mean outside of the Eastern District of Texas? A lot, according to Judge Mazzant’s nationwide injunction.
The parties dispute the scope of the injunction. The State Plaintiffs seek to apply the injunction nationwide. Defendants contend a nationwide injunction is inappropriate. Instead, Defendants suggest the injunction should be limited to the states that showed evidence of irreparable harm. Absent contrary intent from Congress, federal courts have the power to issue injunctions in cases where they have jurisdiction. It is established that “the scope of injunctive relief is dictated by the extent of the violation established, not by the geographical extent of the plaintiff class.” A nationwide injunction is proper in this case. The Final Rule is applicable to all states. Consequently, the scope of the alleged irreparable injury extends nationwide. A nationwide injunction protects both employees and employers from being subject to different EAP exemptions based on location.

So, unless and until you hear otherwise, it looks like the new overtime regulations are DOA. And with President-elect Trump about to appoint a much more business friendly Secretary of Labor, we should not expect any zombiefied revival.

Employers, yes, miracles can happen.