Labor Department Appeals Overtime Rule Injunction…What Now?

The Department of Labor (DOL) has moved for an expedited appeal of the injunction that has delayed the new overtime salary rules but it seems unlikely that the appeal will be heard and decided February, 2017, at the earliest.

This means that the uncertainty regarding the fate of the DOL rules will continue for a while as we await  action (or perhaps inaction) from our next president and/or the newly configured Congress.

“Expedited” May Not Be Fast Enough

Even with an expedited appeal, the timing requirements for legal briefs, responsive briefs and replies to responsive briefs means that all necessary papers would not be filed with the Appeals Court until early February. Then, the parties must have their opportunity for oral arguments, which the DOL has requested on “the first available date after close of briefing.”

Meanwhile, inauguration day is January 20.  Believing that a Republican president would seek to limit government’s reach into the private workplace, many experts predict that the Trump administration will decline to support the DOL rules.   However, our president-elect rode to victory on populist sentiment and support for working people, so he might not want to disappoint this portion of his constituency so early in his presidency.  As such, it is conceivable that the change in administration will not spell the end of the overtime rules.

Two other critical factors may also play into this.  First, Judge Amos Mazzant issued the injunction simply to maintain the status quo while he continues to evaluate the underlying lawsuit that seeks to invalidate the new rules permanently.  This may be a bit of a longshot but what if Judge Mazzant surprises us and actually decides the entire case in the coming weeks?  A decision that the DOL overstepped its authority obviously would invalidate the new rules, but a decision in favor of the DOL would effectuate the new rules immediately and perhaps even retroactively to December 1.

Second, Congress could still act, either in the current session or when they reconvene in January, to invalidate the rules through the Congressional Review Act, as we explained in our recent article entitled “What Happens to the New Overtime Rule Now?“.

What Are Our Options?

At this point, our advice remains the same since nothing has really changed since the injunction was issued.  If you have already made changes, you might consider keeping them in place until you see what happens next.

If you haven’t made changes, or have not yet implemented them, you have a delicate choice.  If you do nothing and the rules ultimately are upheld and enforced retroactively, you could be found liable for unpaid overtime as of December 1.  On the other hand, making changes now that later prove to have been unnecessary under invalidated rules would be very expensive.

Many employers are adopting a wait-and-see posture, holding off on making any changes until there is more certainty.  That seems like a well-reasoned approach, especially if it is accompanied by steps to minimize overtime hours by those who might be affected by the rule.  Still, every employer needs to evaluate for themselves what course of action works best for them..

Finally, there is talk that some states are gearing up to amend their own wage & hour laws to increase the exemption salary threshold to meet or even exceed what the DOL has proposed. Since most employers are subject to both state and federal regulation in this area, these states could take matters into their own hands and make the wrangling at the federal level irrelevant.  We know of no such efforts here in Minnesota (yet), and are also mindful of the fact that Minnesota law requires that overtime be paid only after 48 hours in a week so the impact of state action might be somewhat limited.

Bottom Line

Fasten your seatbelts – it’s going to be a bumpy ride for the next couple of months.