United States: Texas Judge Halts December 1 Implementation Of Department Of Labor's "Overtime Final Rule"

Last Updated: November 28 2016
Article by Ashlee C. Grant

Christmas came early for many employers yesterday when, in a stunning turn of events, Judge Amos L. Mazzant III of the Eastern District of Texas issued a nationwide injunction halting the implementation of the Department of Labor's Overtime Final Rule. This Overtime Final Rule would have doubled the requisite minimum salary threshold for employees to qualify as exempt from the FLSA's overtime regulations and extended overtime eligibility to an estimated 4.2 million workers. But, in a blow to the Obama administration's economic legacy, a federal judge in Texas granted a preliminary injunction Tuesday delaying the implementation of the Overtime Final Rule and indicating a likelihood that a ruling permanently striking down the regulations is on the forefront.

The Overtime Final Rule

On March 13, 2014, President Barack Obama signed a Presidential Memorandum directing the Department of Labor to "modernize and streamline the existing overtime regulations for executive, administrative, and professional employees," opining that the regulations "had not kept up with our modern economy." On May 23, 2016, after receiving nearly 300,000 comments on the proposed rule, the Department of Labor published its "Overtime Final Rule."

Set to take effect December 1, 2016, the Overtime Final Rule doubled the minimum salary level threshold required to qualify for the FLSA's white collar exemption from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). The Final Rule also established an automatic updating mechanism that would adjust the minimum salary level every three years, with the first automatic increase to occur on January 1, 2020.

Twenty One States and More Than 50 Business Groups Challenged the Final Rule and Moved for Preliminary Injunctive Relief.

In September, a group of 21 states, led by Texas and Nevada, filed a lawsuit in the United States District Court for the Eastern District of Texas challenging the Overtime Final Rule, arguing that the Department of Labor did not have the authority to require that employers offer overtime to workers who earn below a certain amount. That suit was then consolidated with another suit brought by the U.S. Chamber of Commerce and more than 50 other national and Texas business groups also challenging the Overtime Final Rule.

On October 12, 2016, the State Plaintiffs filed an Emergency Motion for Preliminary Injunction and Request for Oral Argument and Expedited Consideration. The Plaintiffs argued that the DOL's rule would force many state and local governments, as well as private businesses, to increase their employment costs substantially. The Plaintiffs also took issue with the policy behind the rule change, arguing that the imposition of a salary threshold disregards the text of the FLSA that predicates an employee's exempt status on whether the employee is actually performing bona fide executive, administrative or professional duties, instead of on the salary the employee is paid.

Judge Mazzant heard oral arguments on November 16, 2016 and indicated that he would quickly rule on the issue by November 22, 2016 in light of the impending December 1, 2016 date of implementation.

The Application of the Executive, Administrative, and Professional Exemption Must be Determined by the Employee's Duties Actually Performed, not by Salary.

In his opinion, Judge Mazzant, an Obama administration appointee, stated that the Department of Labor had "exceed[ed] its delegated authority" and had "ignore[d] Congress's intent by raising the minimum salary threshold such that it supplants the duties test."

Applying the "traditional tools of statutory construction" set forth in Chevron U.S.A., Inc. v. Nat. Res. Def. Counsel, Inc., 467 U.S. 837 (1984), the court found the plain meaning of the terms in Section 213(a)(1) established Congress' intent that the exemption depend on the employee's duties actually being performed – not the employee's salary. Judge Mazzant went on to explain that "if Congress intended the salary requirement to supplant the duties test, then Congress and not the Department should make that change."

Pointing to the approximately 4.2 million employees who, under the Final Rule, would have become eligible for overtime under the Overtime Final Rule without any change in their duties, the court described the Overtime Final Rule's significant increase in the salary level as "essentially a de facto salary-only test."

Judge Mazzant also agreed that the State Plaintiffs would suffer irreparable harm due to the costs of complying with the rule if the injunction was not granted.  In addition to the costs associated with compliance, the court also noted that several state agencies had limited resources and strict budget constraints, leaving them with relatively few options to comply with the regulations – all of which would have a detrimental effect on the services provided to the public.

"Due to the approaching effective date of the final rule, the court's ability to render a meaningful decision on the merits is in jeopardy," the judge said. "A preliminary injunction preserves the status quo while the court determines the department's authority to make the final rule as well as the final rule's validity."

Implications of the Decision

The long-term legal ramifications of yesterday's ruling will be hashed out in the courts, with the incoming Trump administration's Department of Labor and potentially in Congress. Although the injunction is only temporary, the injunction does buy the court more time to come to a final decision on the overtime rule. Nevertheless, Judge Mazzant's decision signaled a strong likelihood that he'll eventually side with 21 state attorneys general and a coalition of business groups that sued to block implementation of the Overtime Final Rule.

In response to the ruling, the Department of Labor stated that it was considering all of its legal options, explaining "The department's overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule." It is anticipated that the Department of Labor will appeal the ruling to the Fifth Circuit Court of Appeals.  It is expected that the appeals will ensue to the United States Supreme Court regardless of Judge Mazzant's final decision and the final decision of the Fifth Circuit.

Due to the impending December 1 implementation of the Overtime Final Rule, many employers' focus had been turned away from the usual holiday parties and end-of-year financials and instead was focused on the impending December 1, 2016 implementation Overtime Final Rule. The drastic increase in salary level has caused many employers to increase employee compensation or implement new changes to their employee timekeeping, classification and payroll systems.

Those employers that have not yet announced and made changes to their employees' compensation or classifications should consider postponing the effective date of those changes.

There are many employers, however, that have not yet implemented the new changes in employee compensation but have already communicated these upcoming changes to their employees. In these instances, the employer might carefully consider whether to postpone the changes, but at the very least should provide a communication to its employees explaining that the new rules for overtime pay exemptions will not be going into effect as expected due to a court-ordered injunction.

Employers that have already implemented changes to their employee compensation and classification plans, need to proceed with caution before rescinding those changes moving back to their original compensation and classification schemes, as such an abrupt change could cause employees to seek legal counsel.

For now, only one thing is certain – the Overtime Final Rule will not be taking effect on December 1. It remains to be seen, however, whether the Overtime Final Rule will be upheld or become a rule of the past.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.