Labor Department Announces Intent to Appeal Preliminary Injunction of Overtime Regulations on the Day the Regulations Were to Become Effective

On December 1, 2016, the U.S. Department of Labor (DOL) filed a notice with the U.S. Court of Appeals for the Fifth Circuit announcing its intent to challenge a Texas district court’s issuance of a nationwide preliminary injunction blocking the implementation of revised overtime regulations under the Fair Labor Standards Act (FLSA). Ironically, December 1 was supposed to be the effective date for the revised regulations, which would more than double the minimum salary requirements for the FLSA’s major white collar exemptions.

At the direction of President Obama, the DOL had revised the regulations in an effort to make millions of additional American workers eligible for overtime. However, in carrying out that directive, the DOL overstepped its authority, according to Judge Amos L. Mazzant III, the federal judge for the Eastern District of Texas who issued the nationwide temporary injunction on November 22, 2016.

In his ruling, Judge Mazzant found that the DOL exceeded its authority by increasing the minimum salary level contained in the regulations from $455 per week to $913 per week, as the use of the new threshold would supplant the duties tests and thereby exclude from exemption many bona fide executive, administrative, and professional employees under Section 13(a)(1) of the FLSA.

The injunction was issued on the Tuesday before Thanksgiving, and less than 10 days prior to the scheduled effective date of the regulations. At that point, some employers already had made changes to comply with the revised regulations, and many had announced their planned changes.  Since then, additional employers have moved forward with their planned changes, while others have held off in light of the uncertain future of the revised regulations.

A DOL appeal of the preliminary injunction was widely anticipated, although the amount of time it has taken the DOL to file the notice of appeal is somewhat surprising.  Shortly after the injunction was issued, the DOL stated on its website: “The Department strongly disagrees 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 Final Rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule.”

The notice of appeal is a very short document that simply commences the appeal process and does not contain any legal argument.  Possible next steps by the DOL could include a motion to stay the preliminary injunction pending the appeal and/or a motion to expedite the appeal process.  Absent a motion to expedite, the normal briefing schedule at the Fifth Circuit would not be completed until after Donald Trump’s inauguration on January 20, 2017.  As there are no guarantees that the Trump administration would continue to pursue the appeal, one would expect the current DOL to want the appeal to be briefed and argued as quickly as possible.