Paychex Urges Employers to Monitor Developments after Court Injunction Temporarily Blocks Overtime Rule

With news late yesterday that a federal court judge in Texas issued a preliminary injunction temporarily blocking the U.S. Department of Labor (DOL) Final Overtime Rule, Paychex, Inc., a leading provider of integrated human capital management solutions for payroll, HR, retirement, and insurance services, is encouraging employers to closely monitor the latest developments.

The rule, which would have extended overtime pay to an estimated 4.2 million American workers, was scheduled to take effect on December 1, 2016. While the December 1 effective date is currently no longer mandated for employers because the injunction temporarily blocks the regulation, the future of the Final Rule remains uncertain.

“This injunction means that the December 1 deadline for compliance with the new rules cannot currently be implemented or enforced by the Department of Labor,” said Paychex president and CEO Martin Mucci. “While it’s anticipated that there will be further judicial review of the injunction, this development creates substantial uncertainty for businesses.”

In September, two separate lawsuits had been filed against the U.S. Department of Labor challenging the agency’s updated Overtime Rule. The lawsuits argued, in part, that the DOL overstepped its authority and disregarded original Congressional intent when releasing a Final Rule to increase salary thresholds for the executive, administrative, and professional white-collar exemptions from overtime and increasing the annual salary for the Highly Compensated Employee exemption, as well as including an automatic increase to those levels every three years. The two lawsuits were combined last month, and a Federal Court Judge heard the plaintiffs’ motion for a preliminary injunction enjoining the implementation of the new regulations on November 16 before issuing the injunction.

Paychex will continue to closely monitor developments in this situation and will issue updates as necessary. For the latest information and further analysis, visit www.paychex.com/worx.