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November 23, 2016

Federal judge puts brakes on new OT rules slated to take effect Dec. 1

File Photo / Tim Greenway
File Photo / Tim Greenway
Tawny Alvarez, associate at Verrill Dana, left; Douglas Currier, partner and chair of the law firm's labor and employment practice; and Joanna Bowers, associate, at the Portland office. Alvarez told Mainebiz that until a final ruling is made, Maine employers should at the very least proceed with keeping accurate time records, effective Dec. 1, for all employees who potentially could be affected under the DOL's overtime rule.

A federal judge in Texas on Tuesday granted a preliminary injunction blocking the U.S. Department of Labor's new overtime regulations from taking effect nationwide on Dec. 1 as originally scheduled.

The regulations had been slated to expand by millions nationwide the number of workers who would be eligible for time-and-a-half overtime pay when they work more than 40 hours by raising the salary threshold for determining eligibility for overtime pay from $23,660 per year, or $455 per week to $47,476, or $913 per week.

Judge Amos L. Mazzant III of the Eastern District of Texas ruled that the Obama administration exceeded its authority by more than doubling the OT threshold in one fell swoop. Mazzant's ruling explicitly states that it only temporarily halts the DOL overtime rule, stating that the looming Dec. 1 deadline didn't allow enough time to "render a meaningful decision on the merits" of DOL's arguments in favor of the new OT rule or the counter-arguments put forward by the 21 states (including Maine) that sought the temporary injunction.

"The court finds the public interest is best served by an injunction," Mazzant wrote in his ruling, noting that preserving the status quo until a definitive legal ruling is made was the safest option for both the federal government and the 21 states and numerous business groups challenging its OT rules.

What does this mean for Maine employers?

Tawny Alvarez, an attorney with the labor and employment law group of the Portland law firm Verrill Dana, told Mainebiz that until a final ruling is made, Maine employers should at the very least proceed with keeping accurate time records, effective Dec. 1, for all employees who potentially could be affected under the DOL's overtime rule.

That way, she said, if the OT rule is eventually determined to be legal and in force, employers will have the essential records in place to help them determine how many workers might need to be paid overtime retroactively to Dec. 1 under the new guidelines.

"Right now the federal DOL is mulling its legal options," Alvarez said.

Alvarez expected that given the high stakes of the overtime issue for both employers and employees, there was likely to be a flurry of legal maneuverings in the weeks ahead. She advised employers to keep a close eye for updates on the OT rule, including any advisories that might be issued by the Maine Department of Labor.

She also noted that Verrill Dana will be posting updates on its labor and employment law blog.

As reported by Mainebiz shortly after the final OT rule was announced, the U.S. Department of Labor estimates the new OT rule would automatically extend overtime pay eligibility to 4.2 million workers nationwide. In Maine, anywhere from 16,000 to 64,000 salaried workers could be affected, according to a state-by-state analysis compiled by U.S. Sen. Elizabeth Warren, D.Mass. However, Julie Rabinowitz, director of policy, operations and communication for the Maine DOL, told Mainebiz it's difficult to gauge the precise number of salaried workers in Maine who could be affected.

Retailers applaud 'timeout'

The National Retail Federation, which had joined the 21 states and dozens of business groups in the lawsuit seeking a preliminary injunctions, welcomed the judge's ruling.

"The Labor Department's overtime changes are a reckless and aggressive overreach of executive power, and retailers are pleased with the judge's decision," NRF Senior Vice President for Government Relations David French said in a statement issued Tuesday. "The rules are just plain bad public policy, and we are pleased that the judge is allowing time for the case to go forward before they can go into effect. We hope the judge ultimately finds in our favor, and in the meantime this timeout gives Congress a chance to take another look at the impact of these rules."

NRF, the world's largest retail trade association, represents retail stores, restaurants and Internet retailers in the United States and more than 45 countries. Retail is the nation's largest private sector employer, the trade group stated, supporting one in four U.S. jobs – 42 million working Americans — and contributing $2.6 trillion to annual GDP.

Read more

LePage joins coalition lawsuit against overtime rules

New OT rules take effect Dec. 1: Here's what you need to know

New OT rule praised, others say it goes too fast, too far

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