photo source: TaxCredits.net
Twenty-one states filed a lawsuit, State of Nevada v. United States Department of Labor, in September, alleging the revisions to the overtime regulations, known as The Final Rule (“the Rule”), were unconstitutional. United States Magistrate Judge Amos Mazzant of the Eastern District of Texas, appointed by President Obama, issued a preliminary injunction enjoining enforcement of the Rule until further order from the Court. This injunction applies nationwide to all states.
In June 2016, I wrote about the Rule, which was to become effective on December 1, 2016. (See The Final Rule on Overtime Regulations). One of the effects of the Rule is to expand overtime pay coverage. Prior to the Rule, employers had to pay overtime to employees working more than 40 hours a week if the employee earned less than $23,660 per year. Under the Rule, the salary threshold is raised to employees earning less than $47,476 per year.
At the heart of the Court’s decision to issue an injunction is the meaning of “bona fide executive, administrative, and professional capacity,” and whether or not Congress intended the Rule’s exemption to depend on an employee’s duties rather than an employee’s salary. Judge Mazzant determined that Congress’ intent was for the exemption to depend on an employee’s duties. Thus, where the Rule provides that “[w]hite collar employees subject to the salary level test earning less than $913 per week will not qualify for the [Rule] exemption, and therefore will be eligible for overtime, irrespective of their job duties and responsibilities,” the Rule is in direct conflict with Congress’ intent. The Department of Labor’s role is to carry out Congress’ intent; if it fails to do so, the law is unconstitutional.
The injunction is temporary. It will be months before the Court determines whether or not the injunction will become permanent. In the meantime, employees won’t be getting a raise relative to the Rule.
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