For months now, companies have been scrambling to bring employee pay structure in line with new guidelines issued by the Department of Labor (DOL) under the Fair Labor Standards Act (FLSA). New guidelines would have raised the minimum salary for overtime exemption from $23,660 to $47,476 beginning on December 1st, but an eleventh hour ruling from a federal judge in Texas has brought the process to a screeching halt.
Last week, the judge granted a preliminary injunction to preserve the status quo while the court considers a lawsuit challenging the validity of the rule. Because the overtime rule goes into effect nationwide, the judge applied the injunction to all states as well. That means the rule will not go into effect on December 1st as planned, and businesses will have to wait on the court for a ruling.
Of course, that brings up a lot of questions for your HR department. Let’s look at just a few:
Has the rule been completely scrapped?
No. The preliminary injunction simply puts the rule on hold while a judge reviews the merits of the case that challenges it. The DOL could still challenge the judge’s decision. However, the injunction means that the judge thought the lawsuit had enough merit for consideration, meaning that final implementation of the rule is by no means a foregone conclusion.
Do I have to do anything on December 1st in light of the ruling?
No. While the judge considers the lawsuit, current overtime regulations will remain in effect.
Should I proceed with changes to employee status or salary?
That depends on whether you have already implemented the changes or not. If you have not yet changed an employee’s salary or status, it’s a good idea to wait and see what will happen with the overtime ruling. The rule may be modified or completely rewritten, so postponing your changes will give you a chance to act based on the final version of the rule. Bear in mind, however, that you should still have a plan to implement necessary changes if the rule does take effect.
What about changes that have already been made?
If you have already reclassified employees or raised their salary to maintain exempt status, it’s a good idea to leave those changes in place. Backtracking now could create morale problems that would be difficult to recover from.
What does this mean for holiday overtime this season?
As we move into a holiday season that often entails significant overtime, the judge’s preliminary injunction should provide welcome relief to employers. For now, current overtime procedures should remain in place.
The DOL has stated that they strongly disagree with the judge’s decision and will employ all legal options to move forward with implementation.
Still, employers nationwide should hit the pause button on overtime policies—for now.
Read more about this topic: Counting Down to FLSA Overtime Rule Implementation