Breaking News: Federal Judge Hears Overtime Challenge and Promises to Rule Soon

Revised overtime regulations are still scheduled to take effect on December 1, 2016, but an effort to halt them remains alive. Judge Amos L. Mazzant III, a federal judge for the Eastern District of Texas, held a hearing today on a preliminary injunction motion seeking to stop the revised regulations from taking effect nationwide. After vigorous argument on both sides, Judge Mazzant stated at the end of today’s hearing that he is taking the matter under advisement and intends to rule on the preliminary injunction motion by this coming Tuesday, November 22, 2016.

Background

On September 20, 2016, 21 states filed a lawsuit against the U.S. Department of Labor (DOL) and its Wage and Hour Division (including three officials of those agencies) challenging the overtime regulations. A few weeks later, the states filed an emergency motion seeking an injunction to halt or delay the implementation of the new overtime regulations. Meanwhile, on October 19, 2016, another lawsuit—this one brought by numerous chambers of commerce and business groups also aimed at preventing the implementation of the new regulations—was consolidated with the states’ case before the same federal judge in Texas. Before the suits were consolidated, the plaintiffs in the second suit had asked the court to consider a motion for summary judgment to halt the new regulations on an expedited basis. After the cases were consolidated, these plaintiffs also joined in the states’ request for a preliminary injunction. The court has not yet ruled on the motion for summary judgment or the motion for a preliminary injunction.

The Hearing

Today’s hearing before Judge Mazzant was only related to the plaintiffs’ motion for a preliminary injunction enjoining the implementation of the new overtime regulations.  After hearing hours of arguments from the states, the business groups, and the DOL, Judge Mazzant took the matter under advisement and stated that he intends to rule by Tuesday, November 22. While it is not clear how he will rule, during the hearing Judge Mazzant questioned the DOL at great length regarding its arguments for increasing the salary test, at points describing the increase in the salary required under the new rule as “radical” and “drastic.”

Practical Impact

As we wait for Judge Mazzant’s ruling next week, the new regulation—which will more than double the current minimum salary threshold for the overtime exemptions—is still set to go into effect on December 1, 2016. 

Employers should note that even a last-minute injunction putting a halt to the new rule does not necessarily mean that the new rule will be gone forever. The injunction, if granted, may simply halt it from becoming effective on December 1. Still, a preliminary injunction would be a serious blow to the U.S. Department of Labor’s effort to dramatically expand overtime pay across-the-board in one fell swoop. Stay tuned.