12/14/2016

By: Brittany Flaherty Theis

As mentioned in a prior blog post, on November 22, 2016, a United States District Court for the Eastern District of Texas granted a preliminary injunction enjoining the implementation of regulations regarding overtime for executive, administrative, and professional employees (the “Final Rule”) in State of Nevada, et al v. United States Department of Labor, et al. The regulations were promulgated by the Department of Labor. The Final Rule was scheduled to go into effect December 1, 2016, but the preliminary injunction halted its implementation.

A party seeking a preliminary injunction must establish:

  • a substantial likelihood of success on the merits;
  • a substantial threat that plaintiffs will suffer irreparable harm if the injunction is not granted;
  • that the threatened injury outweighs any damage that the injunction might cause the defendant; and
  • that the injunction will not disserve the public interest.

The court in State of Nevada applied all four of those elements to the plaintiffs’ motion for preliminary injunction seeking to halt the implementation of the Final Rule.

First, the court held that the Final Rule is unlawful because the Final Rule exceeded the Department of Labor’s authority, and the plaintiffs, therefore, had shown a likelihood of success on the merits. Second, the plaintiffs alleged that the significant cost of complying with the Final Rule would cause irreparable harm. Several of the state plaintiffs explained that it would cost their respective states millions of dollars in the first year to comply with the Final Rule. Those states alleged that the compliance costs would impact governmental programs and services. The plaintiffs argued that such injury could not be redressed through a judicial remedy after a hearing on the merits of their claims. The court agreed. Third, the plaintiffs argued that the states would be required to spend substantial sums of unrecoverable public funds if the Final Rule goes into effect and that the Final Rule causes interference with government services, administrative disruption, employee terminations or reclassifications, and substantial harm to the public. The Department of Labor and other defendants did not allege any harm that would be suffered if the preliminary injunction was granted. Thus, the court determined the balance of hardships weighed in favor of granting the preliminary injunction. Lastly, the court held that the public interest is best served by an injunction. The court determined that the plaintiffs in State of Nevada satisfied all four of elements.

After determining that the plaintiffs satisfied all four elements required for the issuance of a preliminary injunction, the court considered the scope of the injunction. Specifically, the court determined that a nationwide injunction is proper in this case because the Final Rule is applicable to all states, and therefore, the scope of the alleged irreparable harm extends nationwide. The Department of Labor and the other defendants are enjoined from implementing the Final Rule pending further order of the United States District Court for the Eastern District of Texas.

For more information regarding the Final Rule, read our prior description here. Should you have any questions regarding the Final Rule or wage and overtime restrictions, please contact Whitt Law Attorney Brittany Flaherty Theis.

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