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Preliminary Injunction Issued Preventing Implementation of the Revised FLSA Overtime Regulations

Tags:  (2016 Nov 23rd - 11:44am)

The US District Court for the Eastern District of Texas in the case of State of Nevada, et al v. United States Department of Labor et al issued a preliminary injunction enjoining the U.S. Department of Labor from implementing the revised FLSA overtime regulations on December 1st. The District Court concluded that the “significant increase to the salary level creates essentially a de facto salary-only test. Congress did not intend salary to categorically exclude an employee with [executive/administrative/professional] EAP duties from the exemption.” The District Court found that the Labor Department lacked the authority to implement automatic updates to the salary basis threshold. The District Court also decided that a nationwide injunction was appropriate in this case since the regulations apply to all states.

This case was brought by 21 states challenging the revised FLSA overtime regulations for executive, administrative, and professional employees. The states filed an emergency motion for a preliminary injunction. To be granted a preliminary injunction, the plaintiffs needed to demonstrate that they have a substantial likelihood of success on the merits of the case.

The District Court found that when Congress established the exemption for executive, administrative, and professional employees, it intended it to be defined based on the duties being performed and not on a minimum salary level. A footnote states that “the Court is not making a general statement on the lawfulness of the salary-level test for the EAP exemption. The Court is evaluating only the salary-level test as amended under the Department’s Final Rule.” The District Court believed that the regulations conflicted with the intent of Congress and cited the following statement in the final rules - “white collar employees subject to the salary level test earning less than $913 per week will not qualify for the EAP exemption, and therefore will be eligible for overtime, irrespective of their job duties and responsibilities.” The District Court noted that only Congress and not the Labor Department can decide that the salary requirement should “supplant the duties test.”

The District Court rejected the argument made by the states that the applicability of the FLSA to states violated the Tenth Amendment of the Constitution. The states asked the District Court to overturn the 1985 US Supreme Court decision in the case of Garcia v. San Antonio Metropolitan Transit Authority, which held that Congress had the authority to make the FLSA applicable to state and local governments. The District Court noted that the Garcia case has not been overruled by the Supreme Court, which has “declared that lower courts must follow precedent and allow the Supreme Court to overrule its decisions.”

The Labor Department issued the following statement in response to the decision:

“We strongly disagree with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans. The department’s overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options.”

It is unclear whether the Labor Department will appeal the decision to the US Court of Appeals for the Fifth Circuit. Also unknown is the position of the incoming administration of President Trump on this issue. For additional information on this decision, please contact Neil Reichenberg, IPMA-HR executive director at nreichenberg@ipma-hr.org