New Federal Overtime Rule has been Temporarily Blocked!

Important news for business owners!  The Department of Labor’s (DOL) new overtime rule, set to go into effect on December 1, 2016 has been temporarily blocked by a Federal Judge in Texas.   For now, that means businesses are in a holding pattern.  The courts action stops the proposed changes from going into effect while the court decides the case.

The Backstory: Back in May the DOL released regulations that made significant changes to the Fair Labor Standards Act (FLSA), specifically raising the minimum salary for a staff member to be “exempt from overtime” from $23,660 per year to $47,467 per year.   This would be the first change to this regulation since 2004.  The proposed regulations also provided for automatic updates of these thresholds every three years.

Business groups in 21 states advocated to fight the proposed change by filing lawsuits against the DOL and in October asked for an injunction to delay the ruling.  The delay is only temporary but does apply to employers nationwide.

What now?  For now, you are not required to make any changes to the way you pay your salaried employees by December 1^st.  If you have already increased salaries of your exempt employees to meet the new threshold to continue to be “exempt”, it would be difficult and probably not wisest move to take it back.  But… if you were planning on re-classifying a staff member to a “non-exempt” status as of December 1^st you DO have the option to postpone that decision until the litigation plays out.  If you’re not sure, it’s a good idea to consult legal council before communicating your decision to your staff.

While the rule has been delayed, it may not go away.  You should still have a plan to implement this change in the future if court rules against the pending lawsuit.  It is also possible that the next DOL administration could modify the changes regardless of what the court decides.

Either way, it’s good business practice to continue to evaluate the FSLA status of your employees by reviewing job duties and responsibilities to be sure that you have your employees classified properly and compensated fairly.