On Nov. 22, a federal judge in Texas issued a preliminary injunction, halting the enforcement of the Department of Labor’s (DOL) new overtime rule until further notice. The rule, which was set to take effect on Dec. 1, 2016, would have increased the salary threshold for the “white collar overtime exemptions” to $47,476 per year.
The judge’s ruling gives employers across the country a reprieve from having to raise salaries for exempt employees to the new threshold or pay them overtime. However, an appeal of the ruling is possible. The DOL said in a statement that it was reviewing the court’s order and considering any next steps.
ACTION STEPS
Employers should continue to watch for news of developments related to the overtime rule, as some uncertainty remains. Until a final decision is reached in the case, employers can rely on existing overtime exemption rules.
Employers that have already made adjustments to comply with the new rule may find it difficult to reverse any changes. However, employers may decide to postpone any changes that have not yet been made.
The Future of the Overtime Rule
Supporters of the rule remain committed to what they describe as fair increases in the overtime exemption salary threshold. However, the DOL may be facing an uphill battle in implementing changes to the overtime exemptions.
In his written ruling, the judge suggested that he would side with the parties challenging the rule when resolving the case. He stated that, in issuing the rule, the DOL “exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary threshold such that it supplants the duties test.” However, further steps need to be taken in the court process before the rule is permanently struck down.
Congress may also take action to stop implementation of the rule. In September, the U.S. House of Representatives passed H.R. 6094, which would delay implementation of the final rule until June 1, 2017. The bill would have to be passed by the Senate and approved by the president before it becomes law. President Obama had threatened to veto the bill, but any legislation could fare differently once President-elect Trump takes office.
It is also possible that President-elect Trump could take executive action to block the rule, but it is not clear at this time what approach he would take to change or undo the rule. If the court strikes down the rule, further congressional or executive action may be unnecessary.
Other Issues for Employers
Although the changes to the overtime exemptions may not take effect for some time, if ever, employers must continue to comply with current regulations. In preparing for the rule change, many employers have discovered that employees may have been misclassified, which is an issue that must be addressed to avoid violating the current FLSA regulations.
Via Zywave.
