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Commentary: Federal judge blocks overtime rule


Retailers finally have their reprieve. On Nov. 22, a federal court in the Eastern District of Texas granted a nationwide injunction blocking the enforcement of the FLSA overtime rule. Employers are no longer required to meet the Dec. 1 deadline.

The lawsuit, filed by 21 states and over 50 business groups, including the National Retail Federation and the National Federation of Independent Business, argued that the Department of Labor (DOL) exceeded its authority when it nearly doubled the salary level required for overtime exemption from $23,660 ($455/week) to $47,476 ($913/week).

In a stunning 20-page order, Obama-appointee Judge Amos L. Mazzant III agreed. The court held that the states were able to effectively show "irreparable harm" if the rule went into effect and that the DOL exceeded its authority when it raised the salary threshold. Specifically, the court held that the DOL's increase of the salary threshold was unlawful under the plain language of the FLSA: "Congress did not intend salary to categorically exclude an employee with [exempt] duties from the exemption." The court held that while the DOL had authority to define the duties performed by employees under the executive, administrative and professional exemptions, it did not have authority to raise the minimum salary level "such that it supplants the duties test."

IMPLICATION: So what does that mean for retailers? It means that for now, the overtime law remains unchanged.

If there are exempt employees who were going to be reclassified to nonexempt because they did not earn $913/week, but haven't been reclassified yet, retailers may want to postpone those decisions and give the litigation a chance to play out. No doubt this decision will be appealed to the Fifth Circuit Court of Appeals, but for now, the overtime rule will not go into effect.
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