On Tuesday afternoon, a federal judge for the U.S. District Court in the Eastern District of Texas (Sherman Division) entered a preliminary injunction in State of Nevada et al. v. United States Department of Labor et al., Civil Action No. 4:16-CV-00731, blocking the U.S. Department of Labor’s Final Rule, which would have increased the minimum salary for “white collar” exempt employees from $455 per week ($23,660 annually) to $921 per week ($47,892 annually) and created an automatic update mechanism to adjust the minimum salary level every three years. The Final Rule was to be effective on December 1, 2016.
Case Background
Earlier in 2016, Nevada and twenty (20) other U.S. states filed a lawsuit against the U.S. Department of Labor (“DOL”), the Wage and Hour Division of the DOL, and their agents, challenging the legality of the DOL’s authority to enact the Final Rule. On October 12, 2016, the States filed an Emergency Motion for a Preliminary Injunction. Amicus briefs were filed and a preliminary injunction hearing was held last week on November 16, 2016.
Preliminary Injunction Entered
U.S. District Judge Amos L. Mazzant entered a 20-page Order granting the States’ Motion for a Preliminary Injunction and enjoining the DOL from
“implementing and enforcing the following regulations as amended by 81 Fed. Reg. 32,391: 29 C.F.R. §§ 541.100, 541.200, 541.204, 541.300, 541.400, 541.600, 541.602, 541.604, 541.605, and 541.607 pending further order of this Court.”
In short, the Court preliminarily blocked the DOL’s Final Rule from taking effect this year, which would have set a new minimum salary threshold for exempt, salaried employees. The lawsuit is still pending and the states will likely request that the preliminary injunction be made permanent, while the DOL will likely appeal the entry of the injunction to the Fifth Circuit Court of Appeals.
Today’s Order follows two other recent federal court Orders out of Texas blocking government agency actions directed by the Obama administration. See Texas v. United States, No. 7:16-cv-54, N.D. Tex., Aug. 21, 2016 (issuing a nationwide injunction to ban enforcement of a Department of Education rule related to transgender bathroom policies) and Nat’l Fed’n of Indep. Bus. v. Perez, No. 5:16-cv-66, N.D. Tex., June 21, 2016 (issuing a nationwide injunction to bar implementation of the DOL’s “Advice Exemption Interpretation”).
No Looming December 1, 2016 Deadline
Government and private business employers now have a reprieve (at least temporarily, and perhaps permanently) from the looming December 1, 2016 deadline that was sure to increase labor costs for businesses of all sizes, including costs of defending claims and lawsuits associated with non-compliance (knowingly or unknowingly) related to overtime pay and/or classification of salaried, exempt “white collar” employees under the new Final Rule.