As we mentioned last month, a Federal Court judge in Texas issued an injunction blocking the implementation of the Department of Labor’s white collar exemption changes. The judge implied that the 21 states and various business groups had a potential to win their case and that there would be significant harm in allowing the rule to go forward. This week the Department of Labor filed an appeal of the injunction at the Fifth Circuit in New Orleans.
The Fifth Circuit not only agreed to hear the case but also agreed to an expedited schedule for arguments. For all intents and purposes, the court will hear all the arguments and accept all of the amicus briefs by the end of January. The Court will rule shortly thereafter on whether or not the injunction was properly issued.
The timing of the appeal could make things quite interesting. President-elect Trump has said he will nominate Andy Puzder, a restaurant CEO and Business Leader as the Secretary of Labor. Puzder has stated that he is not a fan of the overtime rule as it is written. He has said that many in management positions would prefer to stay salaried for prestige and flexibility reasons rather than being forced to become hourly employees. Puzder’s nomination could be one of the controversial appointments awaiting Senate Confirmation. This could slow his ability to repeal the rule changes before the court has a chance to make its decision.
It is expected that once he is in, he would repeal the rule change but if it is allowed to be implemented before that time, it will be difficult to sell business on a flip-flop once it is in place. All this is to say that the overtime issue isn’t totally dead and whether or not the Department of Labor wins on appeal, we should expect SOME type of change to the white collar overtime rules in the next few months. I’m not expecting the rule to make it through the combination of the appeal and the new DoL Secretary but for someone that tries to keep up with poliices, it will be well worth the price of the bag of popcorn to watch this one unfold.