Preliminary Injunction Halts Dept. of Labor’s Overtime Rule Nationwide

On Nov. 22, 2016, Judge Amos Mazzant, of the U.S. District Court for the Eastern District of Texas, granted a preliminary injunction successfully halting the December 1, 2016 effective date for the Department of Labor’s Overtime Rule nationwide. The preliminary injunction allows the court to stop the enforcement of this rule until there is an opportunity for complete consideration of the case brought by several business group plaintiffs and 21 states.
The injunction temporarily delays the effective date until the court reviews the lawsuit and makes a decision. The delay is a procedural measure; it does not suggest that the court will decide against DOL on the regulation. Unfortunately, it is impossible to predict how long the delay will last. At any time the judge could remove the injunction and set a new effective date. The National Propane Gas Association (NPGA) is closely monitoring activity on the regulation and will provide updates on developments.

The Overtime Rule modifies the parameters of the Executive, Administration, and Professionals Exemption (“EAP Exemption”) to the overtime requirements of the Fair Labor Standards Act (FLSA). The 21 states filed the lawsuit in Texas to challenge the agency’s modifications to the rule. NPGA provides a general Fact Sheet on the final rule through the membership portal of the NPGA website.

Due to the rule’s fast-approaching effective date, it was expected for the judge to rule quickly, however the preliminary injunction will allow for the schedule of this case to slow down considerably. The court has been provided with the necessary information to make a permanent injunction, but it is unclear at this time what action will be taken next by the court, Congress or the Trump administration in regards to the overtime rule.

The nonpartisan Congressional Budget Office (CBO) recently reported that canceling the overtime changes would benefit consumers by avoiding price increases that would come if companies had to pay their workers more. Real family income would be $2.1 billion higher without the changes in 2017 alone, and families that would have had an increase in overtime earnings would have a net gain. While CBO estimated that the new rules would extend overtime eligibility to an additional 3.9 million workers, it found that only about 900,000 of those employees currently work enough hours to actually receive overtime pay, or 0.6 percent of the U.S. workforce. And those workers would make only an extra $650 a year, the CBO found.

Research conducted for the National Retail Federation (NRF) by Oxford Economics found that the new overtime regulations would force employers to limit hours or cut base pay in order to make up for added payroll costs, leaving most workers with no increase in take-home pay despite added administrative costs. A separate survey found that the majority of retail managers and assistant managers the regulations are supposed to help oppose the plan, citing losses in schedule flexibility, benefits and professional development opportunities that would come with switching from salaried to hourly positions.

The lawsuit brought by more than 50 business organizations argues that both the $47,476 annual minimum salary for workers to be exempt from overtime set by the new overtime rules – more than double the current level – and the automatic increase in that amount every three years, exceed the Labor Department’s statutory authority under the Fair Labor Standards Act and are in violation of the intent of Congress.

(SOURCE: NPGA, Kentucky Propane Gas Association)