On November 22nd, a federal judge issued a nationwide preliminary injunction on the Department of Labor’s new overtime rule which was slated to go into effect on December 1, 2016.
The new overtime rule would have doubled the FLSA’s current salary threshold for exemption from overtime pay from $23,660 to $47,476, which in turn would have extended overtime protection to over 4.2 million Americans.
Federal judge Amos Mazzant of the U.S District Court for the Eastern District of Texas ruled that the Department of Labor (DOL) overstepped its rulemaking authority by raising the salary threshold significantly and by implementing an automatic salary increase every three years.
What Does The Overtime Rule Delay Mean For Now?
- The effective date of the rules has been delayed indefinitely.
- Employers may choose not to implement the changes they had planned for Dec. 1 compliance.
- The new rules have not been thrown out or invalidated – but are under further
How Should Your HR Department Proceed?
The overtime rule delay has left HR departments wondering what their next steps should be. Should they still move forward with the changes they planned to implement? Unfortunately, this is a difficult question to answer and ultimately a business decision, which is harder than a compliance decision. Although employers are not required to make changes, they may want to consider the following:
- Will it hurt the bottom line to make the changes? If so, how much?
- Will it be difficult to undo changes that have already been made?
- How will employees feel about the decision?
- Is the new pay structure better than what is in place now?
- If the changes aren’t implemented now, will it be possible to make them on short notice in the future?
The injunction isn’t final, and it isn’t clear when the district court will make a final determination or what their ruling will be. In the meantime, employers should still have a plan in case changes are made to the existing overtime rules.
Side note: If your business has delayed reclassifying exempt employees to hourly, please use this FLSA Reclassification Delay Letter as guide to notify them of your decision.