Congress enacted the Fair Labor Standards Act (“FLSA”) in 1938. The FLSA requires that employees engaged in commerce receive not less than the federal minimum wage (currently, $7.25 per hour) for all hours worked. Employees are also entitled to overtime pay at one and one-half times the employee’s regular rate of pay for all hours worked above forty in a week.
On March 23, 2014, President Obama issued a memorandum directing the Secretary of Labor to “modernize and streamline the existing overtime regulations for executive, administrative, and professional employees.”
Effective December 1, 2016, the Final Rule will increase the minimum salary level for exempt employees from $455 per week ($23,660 annually) to $921 per week ($47,892 annually). The new salary level is based upon the 40th percentile of weekly earnings of full-time salaried workers in the lowest wage region of the country, which is currently the South. The Final Rule also establishes an automatic updating mechanism that adjusts the minimum salary level every three years. The first automatic increase will occur on January 1, 2020.
The State Plaintiffs filed suit against the Department, the Wage and Hour Division of the Department, and their agents (collectively, “Defendants”) challenging the Final Rule.
The Plano, Texas Chamber of Commerce and over fifty other business organizations (the “Business Plaintiffs”) challenged the Final Rule. On October 14, 2016, the Business Plaintiffs moved for expedited summary judgment. The Court consolidated the Business Plaintiffs’ action with the State Plaintiffs’ action on the unopposed motion from the Business Plaintiffs.
On November 16, 2016, the Court held a preliminary injunction hearing to consider oral argument regarding the State Plaintiffs’ motion. The Court has authority to enjoin the Final Rule on a nationwide basis and decided that it is appropriate in this case, and therefore granted the State Plaintiffs’ Emergency Motion for Preliminary Injunction.
U.S. Chamber of Commerce Senior Vice President of Labor, Immigration, and Employee Benefits Randy Johnson issued the following statement regarding the decision by the district court in Sherman, Texas to grant a preliminary injunction blocking the Department of Labor’s (DOL) new overtime regulation nationwide:
“We are very pleased that the court agreed with our arguments that the Obama administration’s new overtime rule was unlawful and stopped rule from taking effect on December 1. If the overtime rule had taken effect, it would have resulted in significant new costs – more than $1 billion according to the Congressional Budget Office – and it would have caused many disruptions in how work gets done. Furthermore, the rule would have reduced workplace flexibility, remote electronic access to work, and opportunities for career advancement. This is a great result.”
The U.S. Chamber of Commerce is the world’s largest business federation and a lobbying organization that has supported the tobacco industry.
