THE SSP FIRM BLOG
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The DOL Overtime Rules: A Cautionary Tale on Nationwide Injunctions
Thursday, May 25, 2017
By Josh M. Smith, Employment Law Lawyer
May 25, 2017
Most employers were hopefully well aware of the Department of Labor’s new overtime regulations raising the minimum salary threshold for exempt employees from $23,660 to $47,746, originally set to go into effect on December 1, 2016. Undoubtedly, many employers made proactive business decisions to switch their affected employees to hourly status well prior to the deadline. As the saying goes, however, no good deed goes unpunished. On November 22, 2016 (a week before the deadline), Judge Mazzant from the Eastern District of Texas issued preliminary injunction of the new rule, halting its implementation on a nationwide basis. Since then, Judge Mazzant’s order has been undergoing an appeal in the Fifth Circuit.
Raises a Tough Question for Employers
This raises a difficult question for employers. Since the rule has been halted, can employers now switch their affected employees back to salary while the appeal is pending?
The answer is not as clear as one might think. Courts have split as to whether a nationwide injunction by a trial court, which is later overturned, can have retroactive effect during the period in which the invalidated injunction was in effect.
New DOL Rules for Caregivers
This most recently came up with respect to new DOL rules for caregivers. In 2013, the DOL created a Final Rule which effectively mandated that all caregivers employed by third party agencies be paid overtime. The rule was set to go into effect on January 1, 2015, but was enjoined by a D.C. district court immediately prior to that date. This decision was appealed, and on August 21, 2015 the D.C. Court of Appeals reversed the injunction, and indicated its reversal order would take effect on October 13, 2015.
Litigation Resulted and Courts on Opposite Sides
Litigation resulted, based upon the time-period the injunction was in place, and courts have come down on opposite sides of the issue. In the Southern District of Ohio, in particular, two judges have reached opposite conclusions.
Judge Sandra Beckwith in Bangoy v. Total Homecare Solutions, LLC, held that an employer was entitled to rely on the nationwide injunction at the time it was in place, and
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[1] Nevada v. United States DOL, 4:16-cv-00731, 2016 U.S. Dist. LEXIS 162048 (E.D. Tex., Nov. 22, 2016).
[2] See Bangoy v. Total Homecare Solutions, LLC, 1:15-cv-00573, 2015 U.S. Dist. LEXIS 177859 (S.D. Ohio Dec. 21, 2015); Flamer v. Maxim Healthcare Svcs., Inc., 1:15-cv-02070-JFM, 2015 U.S. Dist. LEXIS 182416 (D. Md. Oct. 26, 2015)(granting motion to strike “because the effective date of the regulation…could not become effective on January 1, 2015.”); Kinkead v. Humana, 3:15-cv-01637, 2016 U.S. Dist. LEXIS 93410 (D. Conn, July 19, 2016)(pending appeal); Lewis-Ramsey v. Evangelical Lutheran Good Samaritan Soc’y, 2016 U.S. Dist. LEXIS 15376 (S.D. Iowa, Sep. 21, 2016); Cummins v. Bost, Inc., 2:14-cv-02090, 2016 U.S. Dist. LEXIS 150858 (W.D. Ark. Nov. 1, 2016); Sanchez v. Caregivers Staffing Servs., 1:15-cv-01579, 2017 U.S. Dist. LEXIS 11259 (E.D. Va., Jan. 26, 2017); Dillow v. Home Care Network, Inc., 1:16-cv-00612, 2017 U.S. Dist. LEXIS 27133 (S.D. Ohio February 27, 2017).
[3] Home Care Assoc. of Am. v. Weil, 78 F.Supp.3d 123 (D.D.C. 2015).
[4] Home Care Assoc. of Am. v. Weil, 799 F.3d 1084, 1097 (D.C. Cir. 2015).
thus the plaintiffs failed to state a claim based on the failure to pay overtime from January 1, 2015 through late August 2015.
2. More recently, however, Judge Timothy Black concluded in Dillow v. Home Care Network, Inc. that, “the enforceability of the DOL regulations at issue in this case is applied retroactively as well, and that their effective date is January 1, 2015.” In doing so, Judge Black disagreed with the Bangoy decision, stating that “[t]he more equitable holding is that any party involved in ongoing litigation should be prepared to be responsible for the implications of a retroactive ruling not in its favor at the appellate level.”
Based on this uncertainty, employers should be extremely cautious before relying on any nationwide injunctions under appeal, including Judge Mazzant’s decision. While the new Trump Administration may abandon this appeal at some point in the future, there has been no guarantee that this will occur. Employers should always consult with counsel before making any decisions with respect to classifying or re-classifying employees.
Published 05/25/2017: If you have any questions about any of the information contained in this blog, contact Josh Smith via phone: 513-533-2700 or by email at jms@sspfirm.com. Advertisement Only. Content in this blog was accurate and researched as of date published. This article is intended for general information only and not as legal advice. You should discuss specific details with your attorney to determine how legal developments may apply to your situation.
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