Legal insights into federal court order indefinitely delaying new U.S. Department of Labor rule on overtime

By Whitney Crowe, KSBA staff attorney

On Nov. 22, a federal judge in the Eastern District of Texas granted a preliminary injunction to halt the implementation of the new overtime rule nationwide. Judge Amos Mazzant’s decision, which was announced approximately one week before the changes were to become effective, leaves the current minimum salary threshold of $455 per week in place pending a final decision in the case.

Earlier this year, the Department of Labor (DOL) announced changes to the Fair Labor Standards Act (FLSA) that were to become effective Dec. 1. These changes were expected to impact over 4 million workers across the country and included provisions that more than doubled the minimum salary threshold to the equivalent of $47,476 per year, and established a process for automatic salary threshold adjustments to occur every three years.

For Kentucky’s 173 school districts, the changes to the FLSA meant that classified workers making less than $913 per week would need to be designated as non-exempt employees, regardless of their job duties or any prior FLSA designation, and paid overtime for any hour over 40 that they worked in a week. Certified staff were unlikely to be impacted by the changes, as most are exempt from the FLSA under a professional exception that covers individuals who are employed in an “educational establishment” with the primary job duty of teaching, tutoring, instructing or lecturing.

Back in October, 21 states, including Kentucky, filed an emergency motion for a preliminary injunction to halt implementation of the new overtime rule on the basis that the DOL exceeded its authority by raising the salary threshold too high and by instituting the automatic salary adjustments. In granting the injunction, Judge Mazzant noted that the DOL, by its own admission, could not create an evaluation based solely on a worker’s salary and said, “[T]his significant increase to the salary level creates essentially a de facto salary-only test.”

The issuance of a preliminary injunction means Judge Mazzant believes the plaintiff states have a substantial likelihood of succeeding on their claims. However, the final disposition in the case has not been rendered and may be delayed pending a DOL appeal. In the meantime, the implementation of the new overtime rule is delayed indefinitely, and employers can continue operating under the existing FLSA guidelines.

If your district already took action in anticipation of the Dec. 1 deadline, consult with your board attorney about how to proceed. Legal counsel will be especially important if employee salaries were already raised to meet the expected higher salary threshold.

For more information, contact KSBA staff attorneys John C. Fogle III, or Whitney A. Crowe at 1-800-372-2962.

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