Court Blocks New U.S. Overtime Requirements

In a move welcomed by aviation businesses, a U.S. district court has issued a preliminary injunction to block a Department of Labor rule that would significantly increase eligibility for mandatory overtime. The Department of Labor (DOL) in May released the rule, which raised the minimum salary for employees “exempt” from mandatory overtime requirements to $47,476 from $23,660. Under the rule, the exempt threshold would be adjusted periodically. The rule was to take effect December 1.

The DOL issued the rule, which expanded the number of employees eligible for mandatory overtime to 11 million from six million, over the objections of numerous business groups, among them a number of aviation entities. NATA had expressed concern about the impact on small businesses and NBAA had noted that the change was among “the most substantial since the introduction of the Fair Labor Standards Act (FLSA) in 1938.”

Twenty-one states and 50 business organizations are challenging the rule, and on November 22 the U.S. District Court for the Eastern District of Texas issued a preliminary injunction blocking both implementation and enforcement of the rule. The court determined that the rule “does not comport with Congress’s intent” as far as who is exempt from the mandatory threshold. The court noted that the rule’s “significant increase to the salary level creates essentially a de facto salary-only test” for exemption, but said this is not in line with congressional intent. 

The court noted arguments made by the states that the rule’s provision for periodic adjustments is illegal, because it bypasses a notice and comment period. The court further determined that “because the final rule is unlawful, the court concludes the department also lacks the authority to implement the automatic updating mechanism.”

While the lawsuit was filed by specific states and businesses, the court decided to apply its ruling nationwide because “the scope of the alleged irreparable injury extends nationwide” and added that such application would protect employers and employees from being subject to different regulations based on location.

Aerospace Industries Association (AIA) president and CEO David Melcher lauded the ruling, echoing the belief that the rule exceeded the DOL’s statutory authority and cited Congressional Budget Office estimates that the rule would impose $1 billion in costs to business.

“A responsible increase to the salary threshold for overtime pay is due; however, the DOL rule moves too far, too fast and disproportionately impacts small businesses, nonprofits, local governments and academic institutions,” Melcher added.

The Aeronautical Repair Station Association (ARSA) called the decision of the judge a welcome relief, noting that the rule “would have imposed a significant burden on commercial enterprise, particularly small businesses.” But with the current changeover in administrations, the association added, “the rule’s future is in jeopardy as President-elect Trump’s support is unlikely and further court proceedings are months away.”

ARSA cautioned that the injunction, “does not eliminate all uncertainty for businesses, particularly those employers who had already planned to comply with the mandate only to have it reversed in the final two weeks before implementation.”