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State Legislative Update

December 2016

The United States District Court for the East District of Texas has temporarily halted the implementation of the Department of Labor’s Overtime Rules that were scheduled to go into effect on December 1, 2016. You previously received a Regulatory Bulletin from the Illinois CPA Society outlining the requirements of the DOL regulatory changes. In summary, the DOL Overtime Rule doubled (to $47,476) salary threshold under which virtually all workers receive time-and-a-half pay whenever they work more than 40 hours in a given week.

Legal Aspects of the Court’s ruling

Twenty-one states led by the Nevada Attorney General and 50 business groups challenged the rules in Federal District Court noting significant compliance costs and irreparable harm by forcing states and businesses to substantially increase labor costs. District Judge Amos Mazzant enjoined enforcement of the rules on the basis that the regulation “creates a de facto salary-only test”. Judge Mazzant concluded that the regulation violates the Administrative Procedures Act by implementing automatic wage update without the required notice and comment period. The Department of Labor has stated that they disagree with Judge Mazzant’s ruling and most likely will appeal. Such an appeal would be to the United States Court of Appeals for the Fifth Circuit.

What to do?

Practitioners and employers have been preparing to implement the DOL regulatory changes scheduled to take effect on December 1, 2016. The court’s preliminary injunction is temporary until the issues cited in the judge’s ruling can be adjudicated. Practitioners and employers should review their proposed overtime policies and be prepared to implement the Department’s proposed regulation if the court’s stay is lifted. Absent a lifting of the court’s stay, the new rules will not go into effect and existing wage and hour overtime rules govern.

ICPAS Government Relations will continue to monitor this issue and keep you informed of future developments and regulatory pronouncements.