In a shocking 11th-hour victory for small businesses everywhere, a federal judge in Texas granted a preliminary injunction against the FLSA overtime rule on Tuesday.
The December 1, 2016 implementation date of the Final Rule is postponed and employers need not adjust salaries upward in order to continue to claim exempt status. The injunction is nationwide and applies to all states, even those that did not join in the lawsuit.
This is the result of a lawsuit filed by 21 U.S. states and several employer groups to enjoin the implementation of the long-anticipated Fair Labor Standards Act (“FLSA”) regulations, which were scheduled to go into effect on December 1, 2016.
On November 22, 2016, Judge Amos L. Mazzant of the U.S. District Court for the Eastern District of Texas granted the motion, temporarily barring the regulations from going into effect nationwide.
Judge Mazzant found that the plaintiffs were likely to suffer irreparable harm in the absence of preliminary relief. Judge Mazzant found that the states would be required to spend substantial sums of unrecoverable public funds if the Final Rule were to go into effect, and implementation would interfere with government services and operations.
It was also determined that the implementation could significantly affect state budgets, cause layoffs, and disrupt governmental functions. He therefore concluded that a brief delay in implementation of the Final Rule—essentially, maintaining the status quo pending a trial in the merits—was warranted.
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