Overtime Pay Rule Blocked by Federal Judge

With just over one week remaining until the implementation date of the Department of Labor’s Overtime Rule, U.S. District Court Judge Amos Mazzant for the Eastern District of Texas has brought the process to a standstill.

Twenty-one states, as well as the U.S. Chamber of Commerce and other business groups, filed an emergency motion for a preliminary injunction in October, claiming the DOL exceeded its authority by raising the salary threshold too high and by providing for automatic adjustments to the threshold every three years.

What does this mean for employers? Essentially, because the rule will not go into effect on December 1, 2016, employers will not be required to either increase salaries to the new threshold for exempt workers meeting the proposed overtime rule criteria or change currently exempt employees to hourly positions based on the FLSA classification exemptions. It is important to consider that the preliminary injunction isn’t permanent and the overtime rule could potentially be implemented at a later date.

What should employers do if they have already raised salaries to meet the new threshold or reclassified employees to nonexempt status? Employers will likely want to leave their decisions in place as it would be difficult to retract. However, for employees that have not been reclassified yet, employers may want to postpone those decisions and allow litigation to proceed and a final decision delivered.

Creative Business Solutions specializes in ensuring each of our valued clients is in compliance with all laws and regulations applicable to their respective businesses. Please call us today and we will be pleased to assist you with any HR compliance issue you may be experiencing, including the Overtime Rule.