Just 10 days before the implementation date of the proposed FLSA overtime regulations, Federal Judge Amos L. Mazzant III of the Eastern District of Texas issued a preliminary injunction last night blocking these changes. The injunction was imposed nationwide at the request of 21 states, the U.S. Chamber of Commerce, and other business groups.
A preliminary injunction is meant to preserve the status quo of action or inaction, pending a final decision on the case. Preliminary injunctions remain in effect during the pending court case unless otherwise modified or dissolved by the court. What this means is the new overtime regulations will not take effect as planned on December 1, but could still be implemented at a later time. Employers should continue to follow the current overtime regulations until a final decision is made.
While a decision isn't final, given the injunction, the revised regulation as it stands may face an uphill battle. It is unlikely the court would have granted a nationwide injunction unless it believed the states showed a substantial likelihood of succeeding on the merits. Furthermore, Judge Mazzant stated that the DOL overstepped its authority and the new rules resulted in a dramatic change in the salary threshold.
If a company has already acted on the new regulations and communicated salary increases to employees, the company should carefully weigh the cost savings of a "do-over" with the significant impact that lowering salaries would have on employee morale, especially around the holidays. Communication is critical during this time. For exempt employees who are to be reclassified as non-exempt but haven't been reclassified yet, companies should consider whether to postpone those decisions until a final decision is made.
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