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Judge Suspends the Department of Labor's Overtime Rule

November 23, 2016

On Tuesday evening a federal judge in the Eastern District of Texas blocked the Department of Labor's (DOL) Overtime Rule (29 CFR Part 541) from going into effect on December 1, 2016. The emergency motion by U.S. District Judge Amos L. Mazzant III was granted at the request of tribal governments, 21 states, the U.S. Chamber of Commerce, and other like-minded organizations.

The judge granted the injunction as it "preserves the status quo while the court determines the department's authority to make the final rule as well as the final rule's validity." In this injunction, the court ruled regulation exceeded the authority granted to the DOL by Congress.  Yesterday's decision was temporary. However, it does delay the implementation from taking place as planned next week. The DOL said it "strongly disagreed" with the decision and will very likely appeal the injunction. 

In recent months to prepare for the rule, tribal employers have reshuffled their staff to accommodate the regulation and their budgets. Some tribal employers have raised employee salaries to the new threshold to avoid the overtime costs, while others converted salaried employees to hourly workers. In some cases employers selected to cut base pay to offset the overtime expense to accommodate inflexible grant budgets.

NAFOA will continue to monitor this issue closely. For questions or comments please contact Jennifer Parisien at Jennifer@nafoa.org  or (202) 558-8040. 

Summary of Overtime Rule:

  • Increases Standard Salary from $23,660 to $47,476 a year
  • Increases Highly Compensated Employee Salary from $100,000 to $134,004 a year
  • Automatically updates the threshold every three years, beginning January 1, 2020.