On November 22, the National Retail Federation secured an important preliminary injunction against the Labor Department’s new overtime regulations. The ruling in the U.S. District Court for the Eastern District of Texas halts implementation and enforcement of the overtime rules nationwide until the court completes consideration of the underlying case brought by NRF, dozens of other business groups and 21 states. The ruling has since been appealed by the Department of Justice but the injunction remains in place while the appeal is under consideration.
The lack of certainty on the timing and outcome of a decision made it necessary for some retailers to begin the process of complying with the overtime rules, which had been scheduled to take effect on December 1. As a result, some employers have found themselves at different stages in the implementation process and need to evaluate what course of action is appropriate for their workforces in light of the injunction. The court-ordered timeout gives Congress a chance to reassess the impact of the rules and provides breathing room for retailers during the busiest time of year.
It is unknown whether the Labor Department’s appeal will be resolved by the time of President-elect Donald Trump’s inauguration on January 20. Trump has not taken a public position on overtime expansion but is not expected to support the regulations. His Labor Department could withdraw the appeal and allow previous overtime rules to remain in place, or draft a revised version that would be more acceptable to employers.
Since a final ruling has not been issued, employers should remain ready to comply if the injunction were to be reversed.
What retailers need to know now
With a temporary injunction in place, the new rules are put on pause. At the moment, retailers can halt any compensation and reclassification changes that were being made, in compliance with any applicable state and local laws. But since a final ruling has not been issued, employers should remain ready to comply if the injunction were to be reversed. NRF will closely monitor all legal developments and continue to be a resource for retailers needing guidance.
For retailers that may have already implemented changes, each company should evaluate which changes, if any, should be reversed considering the court’s ruling and the impact on employee relations.
NRF believes DOL’s overtime changes are too much, too fast for retailers and retail employees to bear without serious consequences for all. If implemented as written, the new rules would decimate the salaried workforce and deprive employees across the country of career advancement opportunities and workplace flexibility. NRF is hopeful that the courts will ultimately rule in retailers’ favor and permanently block the overreaching rules.