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Texas-based federal court nixes new overtime rules

 - New rules were to start Dec. 1

A federal court based in East Texas last week issued a nationwide preliminary injunction preventing the Obama administration’s new overtime rules from taking effect Dec. 1 as scheduled. The action halts not just the new salary threshold for overtime, but also the scheduled increases to the threshold in future years until the court has had an opportunity to rule on the legality of the rule change.

Neither the injunction nor the proposed rule change has any impact on the 1961 exemptions from the federal Fair Labor Standards Act requirements for small market broadcasters

TAB opposes many of the provisions of the new rules and is engaged in a national effort to rewrite the rule through legislation being advanced by Sen. Lamar Alexander, R-Tenn. The fate of that legislation is still to be determined, but the court ruling made clear that the Department of Labor will have a hard time defending its new rules.

Scott Flick, TAB’s DC legal counsel with Pillsbury Winthrop Shaw Pittman, notes in his latest legal advisory that in granting the preliminary injunction, the federal court in East Texas determined the DOL had exceeded its authority by including a salary component in addition to the “duties” test embedded in the statute.

The Department of Labor is expected to seek an immediate appeal of the preliminary injunction in part because if the court case continues past January 20, as is likely, the incoming Trump administration is not expected to defend the rule change and will thereby let the new rules die before taking effect.

TAB’s state legal counsel, Jackson Walker LLP, advises that companies that have not already announced or implemented new measures related to the DOL’s rule might consider a wait-and-see approach while planning for variety of possible outcomes. Those that already have announced or implemented new practices should be careful about rescinding those measures.

Questions? Email TAB's Oscar Rodriguez or call (512) 322-9944.

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