DOL Overtime Rule: Hope for the Best; Prepare for the Worst

The United States Department of Labor’s (“DOL”) Wage and Hour Division’s final rule increasing the minimum salary threshold for White-Collar employees to be exempt from overtime from $445 per week (or $23,660 per year) to $913 per week (or $47,476 per year) (the “DOL Overtime Rule”) is set to take effect December 1, 2016 (See Related Article).  However, twenty-one (21) states, led by Texas and Nevada, have sued the DOL seeking to prevent the implementation of the DOL Overtime Rule.[1]  If the lawsuit is successful, an injunction would prevent the DOL Overtime Rule from taking effect.[2]

The DOL Overtime Rule will likely have a significant impact on employers, particularly in industries with low profit margins, such as the retail and restaurant industries.  The lawsuit provides employers with some hope that the DOL Overtime Rule will not take effect December 1, 2016.  However, most commentators believe that the lawsuit will not successful.[3]  Employers should continue to prepare to comply with the DOL Overtime Rule by December 1, 2016, and   Campbell Litigation will report back when further updates are available.

[1] Nevada v. U.S. Dep’t of Labor, 16-cv-00407 (E.D. Tex. filed Sept. 20, 2016). The following states have joined in the lawsuit: Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, New Mexico, Nevada, Ohio, Oklahoma, South Carolina, Texas, Utah, and Wisconsin.

[2] Patrick Svitek, Texas Sues Obama Administration Over New Overtime Rule, The Texas Tribune (Sept. 20, 2016).

[3] See Staci Ketay Rotman and Erin Fowler, 21 States File Suit Challenging the DOL’s New Overtime Rule, Wage & Hour Insights (Sept. 20, 2016) (available at: http://www.wagehourinsights.com/2016/09/21-states-file-suit-challenging-the-dols-new-overtime-rule/)