Dive Brief:
- A federal judge in Texas on Tuesday evening granted a preliminary injunction against the Fair Labor Standard Act overtime rule, which was scheduled to go into effect Dec. 1.
- The FSLA rule was set to increase the threshold for salary "exemption" from $23,000 per year to $47,476 per year. A lawsuit challenging the rule was filed by 21 states and a variety of employer groups, including the National Retail Federation.
- U.S. District Judge Amos Mazzant said Tuesday that states that challenged the rule were able to effectively show "irreparable harm" if it went into effect, while the Labor Department did not prove it would be harmed if the rule was not implemented, Law360 reports.
Dive Insight:
In a surprise decision, the court ruled in favor of a preliminary injunction for the overtime rule, delaying its implementation nationwide.
Many in the employment law field did not think Mazzant, appointed by President Barack Obama, would strike against the rule. Employers' concerns about how to adjust wage and hour processes may have swayed the court: Mazzant had concerns about the automatic updating clause within the rule, which would call for further increases of the threshold after three years had passed, also known as indexing.
The National Retail Federation praised the court ruling, calling the blocked legislation "reckless" and an "aggressive overreach of executive power." As the largest private employer in the country with about 42 million jobs, the retail industry would be greatly affected by the workforce regulation.
“The rules are just plain bad public policy, and we are pleased that the judge is allowing time for the case to go forward before they can go into effect," David French, NRF senior vice president for Government Relations said in a press release emailed to Retail Dive. "We hope the judge ultimately finds in our favor, and in the meantime this timeout gives Congress a chance to take another look at the impact of these rules.”
The Retail Industry Leaders Association echoed the NRF's approval of the ruling. "As RILA has argued since the final rule was announced earlier this year, the DOL over reached beyond their authority increasing the threshold too much, too fast,” Evan Armstrong, RILA vice president for government affairs, said in a statement emailed to Retail Dive.
Employment law experts can help employers prepare accordingly for what could come next. President-elect Trump has yet to say what his plans are for the overtime rule, though he was previously in support of exceptions for small businesses. The DOL can appeal the ruling, but a Trump administration subsequently could drop any appeal.