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Independent Agents Score Legal Victory As Judge Delays Overtime Rule

WASHINGTON, D.C., Nov. 29, 2016 - In a striking legal victory for independent insurance agencies and small businesses, a federal judge in Texas has delayed implementation of the Department of Labor (DOL) overtime rule pending the outcome of ongoing litigation. Consequently, the new rule will not take effect this Thursday, Dec. 1.

Independent insurance agencies are still required to comply with current state and federal labor laws, but they will not be liable for complying with the new overtime rule.

After hearing arguments from attorneys representing the Big “I” and other business groups, U.S. District Court Judge Amos Mazzant, an Obama Administration nominee, determined that “the public interest is best served by an injunction.” This means the overtime rule will be on hold while the court considers whether or not the DOL had the authority to issue the rule and, if so, whether the rule complies with federal law. 

The injunction is the result of litigation filed by the Big “I,” the U.S. Chamber of Commerce and more than 55 other business groups. The Big “I” lawsuit has been consolidated with a similar lawsuit filed by 21 state governments. Both lawsuits claim that the DOL exceeded its statutory authority when it issued a May 2016 rule that requires employers to pay overtime to many employees who were not previously legally entitled to it. The Big “I” is the only insurance trade association involved in the lawsuits.

The federal government is expected to appeal the decision to delay implementation of the rule. However, an appeal will go to the U.S. Court of Appeals for the 5th Circuit, which is generally perceived as more conservative and, therefore, more likely to be deferential to Judge Mazzant’s ruling.

Furthermore, the lawsuits, including any appeal, are unlikely to be finalized before the new Administration takes office. The election of Donald Trump as the next President will mean a fresh look at many regulations, including the overtime rule, and could impact the legal approach the new Administration takes to defending the lawsuits.

As the lawsuits move forward, the Big “I” will continue to keep members informed of any developments that could impact if or when the overtime rule ultimately takes effect. The Big “I” has set up a webpage of compliance resources to help members implement the rule, should it take effect. Members must log in to view the page, which also includes a one-page document explaining the impacts of the Big “I” lawsuit and injunction.