News & Updates

DOL Changes Under Fire – Key Ruling Issued and Another Ruling Forthcoming November 17, 2016

Back in June, we reported that a district court in Texas issued a nationwide preliminary injunction prohibiting the U.S. Department of Labor (DOL) from implementing the new “persuader” rules that were set to take effect July 1, 2016 marking a significant victory for employers. That same court on November 16, 2016 issued a nationwide permanent injunction blocking the DOL from implementing the rules — and granted summary judgment to the plaintiffs, who were various business organizations, states, and attorneys.

The court held that it is “of the opinion that the Department of Labor’s Persuader Advice Exemption Rule (“Advice Exemption Interpretation”), . . . should be held unlawful and set aside pursuant to 5 U.S.C. § 706(2).”  The court went on to hold that its “preliminary injunction preventing implementation of that Rule should be converted into a permanent injunction with nationwide effect.”  

The rule would have greatly expanded the scope of information employers are required to disclose to the federal government when they engage with outside consultants and attorneys in regard to union organization, including the existence of the relationship itself. Currently, employer communication with outside consultants doesn’t have to be reported unless the consultant has direct contact with the employees themselves. The plaintiffs argued that the rule violated the First Amendment, the Due Process Clause of the Fourteenth Amendment, and the Regulatory Flexibility Act (RFA).

The court’s preliminary injunction issued in June is currently on interlocutory appeal before the United States Court of Appeals for the Fifth Circuit.  Nat’l Fed’n of Indep. Bus., et. al. v. Perez, et. al., No. 16-11315 (5th  Cir. Aug. 29, 2016).  While the appeal is pending, the court’s decision stands as a victory for employers, and reaffirms the importance of employers’ ability to obtain unfettered legal advice on sophisticated issues such as union organization. 

Meanwhile, a court in the Eastern District of Texas has indicated that it will decide by November 22 whether to issue a preliminary injunction to block the implementation of the overtime rule changes to the white collar exemption under the Fair Labor Standards Act. The rule is set to raise the salary threshold for exempt employees from $23,660 to $47,476 on December 1, 2016.  Twenty-one states and several business organizations sued to block the implementation of the regulations. The court indicated that if a preliminary injunction is denied, it will hold a hearing on November 28 on pending summary judgment motions.  The lead case is State of Nevada et al. v. U.S. Department of Labor et al., case number 4:16-cv-00731, in the U.S. District Court for the Eastern District of Texas.

With the upcoming change in administration, it is expected that the DOL’s position on these rules and regulations may change. Nevertheless, employers should continue to make sure they are in compliance or working toward compliance with the FLSA overtime changes. We will continue to monitor these evolving developments.

To review the alert we issued in June 2016 which covered the Court’s preliminary injunction decision in detail, please click here

If you have any questions about these rulings or the impact on your business, please contact:

 

November 17, 2016

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