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Government Relations Special Update – FLSA

The National Association of Professional Insurance Agents is pleased with the ruling issued last night by U.S. District Judge Amos Mazzant of the Eastern District of Texas temporarily preventing the implementation of the U.S. Department of Labor overtime rule set to take effect Dec. 1...
November 29, 2016

The National Association of Professional Insurance Agents (PIA) is pleased with the ruling issued last night by U.S. District Judge Amos Mazzant of the Eastern District of Texas temporarily preventing the implementation of the U.S. Department of Labor (DOL) overtime rule set to take effect Dec. 1.  The DOL’s final rule would have doubled the salary threshold for exemption from overtime from $23,660 annually to $47,476 annually, higher than the minimum set by any state legislature.  Additionally, the rule would have automatically updated that threshold every three years, without consideration of economic circumstances or stakeholder input. Both elements were characterized as “without statutory authority” by the court.

The preliminary injunction, the first substantive ruling in a federal court case filed by the state of Nevada and 20 other states, temporarily stops the new overtime rules from going into effect on Dec. 1, so insurance agencies and other small businesses will not have to make the changes necessary to comply with the new regulations by next week.

In its order granting the temporary injunction, the court found that the DOL exceeded its authority in declaring that some “white collar” employees subject to the salary test are automatically eligible for overtime regardless of their job duties and responsibilities. The DOL’s role is limited to carrying out the will of Congress, and such a drastic change to the relationship between the salary and duties tests must be made by Congress, not the DOL.

To obtain the preliminary injunction, the state plaintiffs had to show that they were likely to succeed on the merits of their case, so the granting of the injunction indicates that the state plaintiffs’ case is likely to succeed. The court chose to maintain the status quo rather than allow the implementation of a rule for which compliance would be expensive and burdensome for states, concluding that no harm would come from delaying the rule’s implementation.  The Eastern District is expected to examine the DOL’s authority to promulgate the rule, as well as the validity of the rule itself, more substantively in the near future.  However, the preliminary injunction buys the court time to do so while protecting the plaintiffs from the negative effects of the rule in the meantime. The order granting the preliminary injunction does not provide a timeline for the court to issue a final order, so we don’t know exactly how long the preliminary injunction will be in place.

If you’re an agency that has already made changes in anticipation of the new regulations, it makes sense to keep those changes in place, and it’s a good idea to continue planning for the implementation of the final rule just in case it is ultimately upheld. But for now, if an agency’s current structure to account for overtime complies with the DOL’s existing rules, that arrangement can continue.

PIA National has strongly opposed the rule due to its negative impact on small businesses, including independent insurance agencies. We are pleased with the granting of the preliminary injunction before the rule was to take effect next week. PIA will continue to urge Congress to pass legislation to permanently stop implementation of the overtime rule, and we will continue to monitor activities out of the Eastern District insofar as they affect the future of the rule.