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The Department of Labor said Wednesday it is now considering its legal options in light of Tuesday’s surprise ruling by a Texas federal court that halted the Dec. 1 implementation of new overtime rules with a temporary injunction.
Observers say, however, that much will depend on whether the department can obtain a legal victory before the Jan. 20 inauguration of Donald Trump as president.
The ruling by the U.S. District Court in Sherman, Texas, leaves employers uncertain how to proceed with regard to the overtime rule, which was subject to take effect next Thursday, Dec. 1.
For now, “we go back to where we were six months ago,” said Bennett Pine, a shareholder with Anderson Kill P.C. in New York. “Clearly, the overtime regulation is not going to go into effect Dec. 1, or any time shortly after that.”
“We strongly disagree with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans,” the Labor Department said in a statement.
“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. We are currently considering all of our legal options,” the statement said.
The ruling, which was scheduled to take effect next week, would have raised the threshold for exempt employees to $913 a week, or $47,476 annually for a full-time employee, compared with the current $455 a week, or $23,660 annually.
In his ruling Tuesday, Judge Amos Mazzant III said it is clear Congress intended the overtime exemption “to apply to employees doing actual executive, administrative and professional duties.”
Experts say it is possible Judge Mazzant may issue a final, permanent injunction before the Trump administration takes office.
They say also options now open to the DOL include asking for an expedited hearing by the 5th U.S. Circuit Court of Appeals in New Orleans, and that the case could conceivably be heard by the U.S. Supreme Court as well.
However, they note also that if there is no further legal action between now and the inauguration, the Trump administration is not expected to support the new rule.
Future possibilities include congressional action on the issue, the Trump administration starting the process of issuing its own regulation or leaving overtime regulations alone as they are now.
Meanwhile, many employers had already made changes to accommodate the new rule, while others had planned to introduce changes at the start of the new pay week, on Sunday or Monday.
Observers said employers must decide what to do based on their own situation, including what they have made so far in preparation for the overtime rule and how nimble they can be in making changes at this point.
“It is truly an individualized decision. I don’t think there’s any one-size-fits-all” solution in this situation, said Alexander J. Passantino, a partner with Seyfarth Shaw L.L.P. in Washington.
While the Fair Labor Standards Act wage-and-hour regulations that double the salary threshold at which white-collar workers are entitled to overtime pay will still go into effect Dec. 1, what action — if any — the Trump administration may take to change them remains unclear, experts say.