As we reported Tuesday, on November 22 a federal district court judge in the Eastern District of Texas issued a nationwide injunction against the implementation of the new Department of Labor (DOL) overtime rules. The regulation was scheduled to take effect yesterday.
The ruling, by Judge Amos L. Mazzant III, states that the Obama administration exceeded its authority by raising the salary limit as significantly as it did—the new rule raises the salary floor for an employee who meets the duties test for the most common overtime exemptions from $23,660 to $47,476. The change had been hailed by worker advocates who questioned exempting workers at or near federal poverty levels from overtime, and simultaneously criticized by small business advocates who feared small businesses could not bear the costs and would respond by out-sourcing labor or converting full-time jobs to part-time.
While employers have a reprieve from complying with the rule, this is not a repeal. Employers and the CPAs who advise them should take note of one important factor. The focus of this decision was on the magnitude of the increase the new rule imposed—not on the question of whether any increase would be appropriate. Therefore, it is entirely possible that there could ultimately be a determination that an increase of a lesser amount, or a phased-in approach, would be appropriate, putting the rule back on a course toward implementation.
More immediately, there is the issue of what employers who have already taken steps to comply with the new rules can or should do about salary adjustments or changes to roles that have been promised or implemented. Can a raise offered in order to meet the new exempt status requirements be taken back now that those requirements are “on hold?” Even if you can, should you?
Surgent is updating its Overtime Rules courses to address these thorny issues – and to answer your questions live. Join us on December 7 or December 12, when we’ll do a deep dive into the old and new rules, the injunction, employer options and strategies, and general FLSA compliance more generally. Or if you just need a quick update on the injunction and what employers who had already complied pre-injunction should do now, join us for a 1-hour session covering these issues December 8.