On Friday, a federal district court granted a preliminary injunction sought by the State of Texas to block implementation of the U.S. Department of Labor’s new rule increasing minimum salaries for overtime exempt employee. However, the court limited the effect of its injunction to the State of Texas as an employer.
The court concluded that the DOL exceeded its authority by making salary level, rather than job duties, the deciding factor in determining whether many employees fall within the executive, administrative, and professional exemptions under the Fair Labor Standards Act. Although Texas asked for a nationwide injunction, the court declined to extend its ruling beyond Texas state employees, reasoning that the state was the only party to the litigation and had failed to present evidence showing that other employers would be harmed if the rule were to go into effect.
While the present order is limited to Texas state employees, the court also entered a procedural order combining the state’s lawsuit with a parallel suit filed by the Plano Chamber of Commerce and other employer groups. The business groups have yet to file a motion for a preliminary injunction or temporary restraining order, but may now do so in light of the court’s ruling on the State of Texas’s motion.
A third lawsuit challenging the new rule, filed by software developer Flint Avenue, LLC, is pending in the U.S. District Court for the Northern District of Texas. The plaintiff in that case did seek a preliminary injunction. The court has yet to rule on that motion.
The DOL has given no indication that it intends to postpone implementation of its new rule for employers other than the State of Texas. While a broader injunction may follow in the wake of this order, employers should assume for the time being that the new salary rules are in effect.