On November 22, 2016, a federal judge in Texas entered a nationwide preliminary injunction blocking the Department of Labor (DOL) from implementing or enforcing the new federal overtime rule. The court found that the rule improperly created a de facto salary test for determining which workers fall under the Fair Labor Standards Act’s (FLSA) so-called “white collar” exemption, irrespective of their job duties and responsibilities and thus in direct conflict with Congress' intent when it enacted the FLSA. The court questioned the statutory authority for the DOL’s salary level under the rule and the rule’s automatic updating mechanism. The judge determined that the 21 states challenging the rule had shown a likelihood of success in their challenge, as well as irreparable harm if it went into effect, while the DOL failed to show it would be harmed if the rule were delayed.

The new federal overtime rule was scheduled to go into effect on December 1, 2016. However, in light of this decision, employers can hold off making any changes pursuant to the rule pending further order of the court.