UPDATE: OMG! Contrary to very-widely-held speculation, a federal district court actually did issue a preliminary injunction against the new FLSA rules! And, the injunction applies nationwide! Click here for further details: Nationwide Injunction Imposed Against New FLSA Rules
This has been a busy couple of weeks for the U.S. Department of Labor’s (“DOL”) new FLSA rules. First, two lawsuits have been filed in a Texas federal court to seek an order preventing the DOL from enforcing its new overtimes rules. In addition, a House bill - HR 6094 – is making its way through Congress to postpone implementation of the new FLSA rules for six months. The new rules are currently set to take effect on December 1, 2016, which is just about two months away.
The first lawsuit was filed by 21 states and argues that the DOL overstepped its authority by raising the salary level for the FLSA’s Executive, Administrative and Professional exemptions (“EAP exemptions”). The lawsuit argues that, instead of raising the salary level, the DOL should have reexamined the duties of the EAP exemptions. In addition, the 21 states also challenged the automatic increases that are set to increase every three years “without regard for current economic conditions or the effect on public and private resources.” Finally, the lawsuit posits that new DOL’s rules violate the Tenth Amendment because employment budgetary matters such as the pay requirements of state employees are subject to state sovereignty.
The second lawsuit was filed by a coalition of business groups, including the National Federal of Independent Businesses (“NFIB”) and several Chambers of Commerce. This lawsuit argues that setting new salary threshold at an exceedingly high level and scheduling automatic increases both violate the Administrative Procedure Act.
(Both lawsuits have been assigned to Judge Amos Mazzant, who was appointed to the bench by President Barack Obama. So, that’s not exactly great news…)
Finally, there are several bills pending in Congress that seek either (1) a delay of the new rules or (2) a phase-in of the increased salary threshold over several years. Specifically, HR 6094 and S. 3462 both seek a six-month delay of the effective date of the new rules and HR 5813 and S. 3464 seek to phase-in the increases over several years.
Recently, the U.S. House of Representatives just voted 241-177 in favor of passing HR 6094. The bill will now go to the U.S. Senate for consideration. However, President Obama has previously threatened to veto the measure if it is passed and the Office of Management and Budget issued a statement that “strongly opposes” the bill.
Therefore, despite all these legal challenges to the new FLSA rules, employers should plan to implement whatever changes they deem necessary by the December 1, 2016 effective date.