Fair Labor Standards Act – Federal Lawsuit

On November 22, 2016, just 10 days before a new law expanding overtime pay to millions of workers was to take effect, a federal judge in Texas halted the implementation of the Fair Labor Standards Act’s so-called Final Rule.

Twenty-one states, including Kansas, joined in a federal lawsuit seeking an emergency preliminary injunction to stop the Rule, arguing that the Department of Labor exceeded its authority by doubling the salary threshold for exempt employees from $23,660 to $47,476 per year. The Rule also required automatic adjustments to the salary threshold every three years moving forward.

The lawsuit was joined by the US Chamber of Commerce and numerous other business groups including the Texas Association of Business, National Automobile Dealers Association, the National Association of Manufacturers, National Association of Wholesaler Distributors, National Federation of Independent Business, National Retail Federation, and more than 50 other national businesses and organizations from around the country.

So what does this mean for employers? For now, employers may continue to follow the existing overtime rules until a ruling is made by the federal judge. The preliminary injunction that is now in place is not permanent – it just preserves the status quo until the court makes a final decision. But the judge would not have granted the preliminary injunction unless he found that the plaintiffs had a substantial likelihood of prevailing on the merits of the lawsuit, so it seems a good possibility that the Final Rule will at least be amended in some respects.

Stay up to date on the lawsuit and its impact on your business, your employees, and your bottom line by contacting one of our skilled advisors at Petefish Law.