Stop the Presses! Federal Judge Stays Implementation of the Overtime Exemption Rule Changes


By:  James P. Reidy and Mark J. Ventola

In a ruling issued late yesterday, a Federal District Court Judge in Texas has blocked implementation of the Department of Labor’s amendments to the overtime exemption rules. For all who have worked hard in preparation to implement the changes that were scheduled to go into effect on December 1, 2016, at least for now there is a reprieve; whether that reprieve is merely temporary or turns out to be permanent, is a question that will be answered in the coming weeks and months.

The Texas lawsuit, brought by 21 States, the United States Chambers of Commerce, and other business organizations, argued that the Department of Labor’s amendments to existing regulations violated States’ Constitutional rights and also side-stepped proper means for adopting and implementing Federal regulations. The Federal Court in Texas agreed, and issued a nationwide injunction blocking implementation across the country.

This story is far from over, as there will be at least one, and possibly two levels of appeal, leaving the fate of this rule in doubt for an unknown period of time. In the meantime employers that had reviewed their payroll practices and planned salary increases, employee reclassifications, or other strategies for addressing what would have been a significant change in the law, would be well-advised to hold off, and stay tuned until this case has run the full course of appeals.

Of course, we are here to help you through this uncertain time, and would be glad to work with you to develop a strategy for proceeding.

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James P. Reidy and Mark J. Ventola are shareholders at Sheehan Phinney Bass & Green. They are Co-Chairs of the firm’s Labor, Employment and Employee Benefits Group.

This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice.