JUDGE STOPS NEW DOL OVERTIME RULE

By November 28, 2016Blog

After months of preparing to implement changes required by an update to the FLSA’s overtime rule, employers and employees across the nation may now find it was all much ado about nothing.

PBS’s Alison Stewart has a thorough report.

In his decision, U.S. District Judge Amos L. Mazzant  said, “the [DOL] exceeds it delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test.”

The new rules had been scheduled to go into effect on December 1. As part of the FLSA changes, the salary level under which employees qualify for overtime pay would have increased from $455 per week ($23,360 annually) to an estimated $913 per week ($47,476 annually). In addition, the rule would have provided for automatic updates to the threshold every three years.

The judge’s ruling stops enforcement of the rule until the Department of Labor receives a contrary ruling from the same Texas court or an appellate court. However, since Texas is in a traditionally conservative court (the Fifth Circuit) and with the results of the recent national elections, it is unlikely that the new rules will ever go into effect.

So What Do Employers Do Now?

At this point, employers are not required to comply with the changes that had been planned for December 1st.

But many employers have already made plans to follow the new rules. It is not recommended to reverse announced salary increases. To do so could significantly impact employee morale.

The Law Firm Troutman Sanders published this about reversing announced organizational overtime policies:

“It will likely be easier for employers to undo the effects on employees who were previously exempt, but who have been told that they will not meet the exemption after December 1. Many employers will likely inform such employees that due to the change in the legal status of the new rules, their exempt status will not be changing December 1 and they will not be required to track their hours and will not receive overtime. The situation is more complicated for employers who have already changed these employees’ status to non-exempt in anticipation of the new rule. Such employers may decide to let these changes stand (as employees may always be classified as non-exempt and paid overtime, even if they might qualify for an exemption). Or these employers may decide to reinstate these employees’ exempt status, blaming the flip-flop on the government and the legal system. Ultimately, each employer must decide whether the morale costs and other intangible costs associated with rolling back the changes are worth it to the organization.”

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