The Labor Department announced today that it is appealing a judge's preliminary injunction that stopped the Obama Administration's new Overtime Rule from taking effect on Dec. 1.
"On Dec. 1, the Department of Justice on behalf of the Department of Labor filed a notice to appeal the preliminary injunction to the U.S. Circuit Court of Appeals for the Fifth Circuit," the Labor Department said in a press statement. "... The Department strongly disagrees with the decision by the court. The Department’s Overtime Final Rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule."
The Labor Department's action responds to the injunction that U.S. District Judge Amos Mazzant issued Nov. 22 blocking the agency from implementing and enforcing the Overtime Rule. (Read the entire ruling.) The rule roughly doubles, to $47,476 a year, the annual pay a worker must receive in order to qualify as a manager and thus be exempt from time-and-a-half overtime pay after working 40 hours in a week. In addition, that $47,476 threshold would rise automatically in the future based on inflation. The Labor Department estimated 4.2 million Americans would be affected by the rule. (See details from the Labor Department.)
A pair of lawsuits brought by state officials and business groups contested the rule. Their cases were combined in Mazzant's court in Sherman, Texas, and led to his decision. There's no timetable on when he will issue a decision on the legality of the entire rule.
The legal actions further complicate life for businesses that would be subject to the rule. A Hanley Wood survey conducted late in October found no more than a third of building material dealers said they were ready for the change.
The Society for Human Resource Management, America's leading association for personnel managers, had suggested following Mazzant's decision that employers leave in place any changes that were made to meet with the Dec. 1 implementation of the Overtime Rule. "Employers will likely want to leave decisions in place if they have already provided salary increases to employees in order to maintain their exempt status.” Employers were recommended to take a wait and see position as litigation continued, noting in part that there's a possibility the rule still will become law.
Trade groups have been optimistic that Mazzant ultimately would side with businesses that disliked the new rule. The National Association of Home Builders said Mazzant "sent a strong signal that he could likely side with NAHB and our business coalition." The New York Times quoted Marc Freedman, executive director of labor law policy at the U.S. Chamber of Commerce, as saying: “We are, assuming that this preliminary injunction holds and there isn’t an appeal or some other thing that disrupts it, done with this regulation.”
The issue's future is complicated by the change at the White House. President-elect Donald Trump has promised regulatory reform, but he hasn't talked much if at all about the Overtime Rule. Its fate also is sure to be debated in Congress, where several bills have been offered. One would impose a six-month delay on the rule from taking effect. Another--backed so far by NAHB--would have permitted the rule to take effect but would have phased in the rise of the threshold over several years while eliminating the automatic escalator clause.