Overtime Rule Delayed, Options Employers Face

Nov. 28, 2016 – A Texas federal court judge has issued a nationwide injunction blocking the U.S. Department of Labor’s (DOL) new overtime rule set to take effect on December 1, 2016. The new rule would have more than doubled the minimum salary from $455/week ($23,660/year) to $913/week ($47,476/year) in order to satisfy the federal Fair Labor Standards Act’s “white collar” exemptions.

For now, employers are being advised to comply with the existing overtime regulations. Many employers, however, have already communicated or implemented their new compensation or scheduling changes. These employers now need to decide whether they continue as planned or delay (possibly even reverse) changes.

Reasons to continue as planned:

  • Use the reclassification of positions as an opportunity to reduce risk related to the duties tests. The duties tests remain unchanged by the injunction.
  • Employers who have already announced salary increases to employees may find them difficult to reverse, even if the rule becomes invalidated. An alternative would be for employers to maintain salary increases, but hold off on future raises.
  • A reversal in decisions made related to job duties that can be performed in a 40-hour week would more than likely have an adverse effect on employee morale.
  • Some employers may already have had employees enroll in benefits based on their post-Dec. 1, 2016 exemption status. A reversal in exemption status could lead to changes in employees’ benefits.

Reasons to delay or reverse:

  • Employers that have waited to announce salary increases until Dec. 1, 2016 may not have to implement increases if the rule becomes invalidated.
  • Employers who haven’t completed all position audits may want to delay implementation in order to implement all changes at once if rule goes into effect.
  • Indications from the incoming Trump administration that the overtime rule will be overturned in the first quarter of 2017.

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This regulatory update is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. Content provided by our professional consulting partners at Synergy Human Resources.