Court Allows Overtime Rule Challenge to Proceed During Appeal

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By Jon Steingart

The challenge to the Labor Department’s overtime rule was allowed to continue during the appeal of a temporary injunction that delayed the regulation from taking effect, a federal district court in Texas said Jan. 3.

The decision means that the court may at any time act on the request to permanently stop the overtime rule (Nevada v. DOL, E.D. Tex., No. 4:16-cv-00731, 1/3/17).

The rule, which was to have taken effect Dec. 1, was blocked by the court’s temporary injunction. A coalition of business groups and 21 states challenged the Labor Department’s move to establish a salary threshold of $47,476, below which workers would be eligible for overtime pay. The department exceeded its authority in establishing the threshold, the court said Nov. 22. The Fair Labor Standards Act does not empower the Labor Department to create a salary threshold test, the court said.

A criterion for a preliminary injunction is that the party requesting it has a substantial likelihood of success on the merits. Winning a preliminary injunction does not guarantee that a party will win a summary, or favorable, judgment because the orders serve different purposes. A preliminary injunction is intended to preserve the status quo while a dispute is litigated. Summary judgment is a final resolution of a dispute the court reaches without a trial, which can be expensive and time-consuming.

The Labor Department appealed the injunction and filed a brief in the U.S. Court of Appeals for the Fifth Circuit on Dec. 1. Oral arguments are to occur shortly after the briefing process concludes Jan. 31, assuming the department does not withdraw its appeal after the inauguration Jan. 20 of President-elect Donald Trump.

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