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Overtime Rule Blocked by Preliminary Injunction

‚ÄčIn late November 2016, a federal judge in Texas issued a nationwide preliminary injunction of the new overtime rule, which was set to go into effect on December 1. This injunction is the result of a lawsuit filed by 21 states, which was combined with a similar lawsuit brought by various business groups against the U.S. Department of Labor (DOL), challenging the final rule. The final overtime rule raised the minimum salary exemption to $913/week and established an automatic updating mechanism that would update the minimum salary exemption level every three years.

The injunction did not overturn the final overtime rule. It delayed the rule to give the court time to determine whether it is valid.

As a result of this decision, employers are not required to comply with the overtime regulations that were set to begin on December 1, 2016. At the least, this preliminary injunction delays the effective date of the new overtime regulations until the court determines the matter on its merits. The timing of such a review—and any potential action by the new administration—is unclear at this point.

PEO next steps:

  • Decide whether upcoming changes can be postponed. This includes changes to payroll software, time and attendance systems, and employee responsibilities.
  • Give a specified amount of time for clients to work through their next steps, while providing agreed-upon assistance to the clients.
  • If communications are set to go out, review them and consider whether revisions are necessary. Any revised communication should lead with a summary of the latest developments: A Texas federal court entered an order that at a minimum delays the start date of the new overtime rules. To follow laws and regulations concerning employee pay, we are reviewing proper steps and will report back about the potential impact upon your business.
  • If changes have been made, work with clients to consider those changes fully.
  • As always, we urge you to reach out to your legal counsel for advice about how to proceed. 

Highlights of Final Overtime Rule

  • The salary threshold is set to $47,476 per year.
  • The highly compensated employee (HCE) exemption is set to $134,004 per year.
  • Every three years there will be an automatic salary threshold increase.
  • The standard duties test will remain the same.

‚ÄčNAPEO Resources on Overtime Changes