Employers have been gearing up for the Department of Labor’s Final Rule regarding overtime and the minimum salary cap for white-collar workers. The Final Rule was supposed to go into effect on December 1, 2016, and would have raised the annual minimum federal wage from $23,660 to $47,476. However, on November 22, 2016, Judge Amos Mazzant III from the Eastern District of Texas granted a preliminary injunction enjoining the Department of Labor from implementing its rule on December 1.

The Emergency Motion for a Preliminary Injunction was filed by 21 States (including Kansas), collectively known as the “State Plaintiffs” in October 2016. The State Plaintiffs were successful in their motion for a preliminary injunction based on the argument that the Department of Labor’s salary level under the Final Rule, as well as the automatic updating of the minimum salary every three years, were without the required statutory authority.

To understand why the Judge ruled that the Department of labor had no statutory authority to make a minimum salary level, it is important to know the history of the Fair Labor Standards Act (“FLSA”). When the FLSA was originally based in 1938, Congress delegated to the Secretary of Labor the power to define and delimit certain terms that were exempted from the overtime requirement, such as “bona fide executive, administrative, or professional capacity.” These exemptions are commonly referred to as the “white-collar exemption.” In turn, the Secretary of Labor authorized the Department of Labor to issue regulations to interpret the “white-collar exemptions.”

The State Plaintiffs successfully argued that because Congress did not explicitly delegate to the Secretary of Labor the authority to define a minimum salary level or to set up automatic updates of the minimum salary every three years, the Department of labor had exceeded its statutory authority. To change the minimum salary level, Congress would need to pass legislation to that effect or amend the FLSA to delegate that authority to the Secretary of Labor.

Judge Mazzant believed the State Plaintiffs had established the necessary requirements to grant a preliminary injunction. A preliminary injunction is not permanent. However, until further action by Court, the December 1, 2016 effective date for the DOL’s Final Rule is postponed. If you have any questions concerning the preliminary injunction on the DOL’s overtime regulation, we here at Joseph, Hollander & Craft LLC are happy to assist in any way we can.

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