For employers, injunction puts brakes on new federal overtime regulations

Employers in New Jersey and every other state headed into the Thanksgiving break without a clear-cut picture as to what the process, if any, will be for complying with the new overtime regulations proposed by the U.S. Department of Labor, after a federal judge in Texas issued a preliminary nationwide injunction on the plan last Tuesday.Taking particular issue with the determination of one’s eligibility based on salary levels alone, U.S. District Judge Amos Mazzant blocked President Barack Obama’s administration’s rules, which were scheduled to go into effect Dec. 1.

According to the last update to the threshold in 2004, salaried employees currently making at least $23,660, or roughly $445 a week, are ineligible for overtime pay.

While the Obama administration initially proposed upping that salary threshold to $50,440, the final rules released back in May settled on $47,476, or about $913 per week, slightly more than double the current amount.

The new figure was also said to include built-in cap updates beginning in 2020 to adhere to the rate of inflation.

The administration is set to now appeal the injunction to the U.S. Court of Appeals for the Fifth Circuit in New Orleans.

James Patterson, a New Jersey-based partner with McElroy, Deutsch, Mulvaney & Carpenter, says that while the appeals process still needs to play itself out, the issuance of the injunction points to the “substantial likelihood that these rules are invalid.”

While employers in New Jersey and elsewhere have likely been working on strategies to best comply with the rules over the last few months, Patterson says that should all now be on hold.

“You basically have to wait. … If this injunction is still in place, then those laws do not have the force of law,” Patterson said.

Either way, Patterson said, he expects the appeals court to take on the matter promptly.

Should the injunction be stayed until President-elect Donald Trump is inaugurated in January, the new Labor Department may choose to drop its challenge.

“It’s going to be one way or the other,” Patterson said. “I don’t think we’re going to have a lot of uncertainty.”