UPDATE: New Overtime Rule Reversal
- On November 29, 2016
Many US employers had a lot to be thankful about this Thanksgiving! On November 22, 2016, a federal judge in Texas (Judge Mazzant) stunned many by pumping the brakes on the Department of Labor’s new federal overtime rule which should have taken effect on December 1, 2016. The federal judge issued a temporary injunction in response to 21 states’ requests for injunctions claiming that the Department of Labor exceeded its authority in raising the salary threshold to an exceedingly high standard and by providing a mechanism for automatic salary adjustments every 3 years.
The takeaway is that the preliminary injunction permits business owners to maintain the status quo until the court makes a final ruling on the validity of the law and the authority of the Department Labor to draft said law. Employers can continue to follow the existing regulations for the time being. If employers have already raised the exempt employees’ salary or reclassified employees, the employers will have to weigh the pros and cons of keeping the changes in tact or reversing them. It is important to note that employers may not recoup wages that were already paid at the higher rates. Please note, that the injunction is not permanent and is in effect until the courts can review the case in its entirety. As such, employers should still have a plan in place should the rule be determined to be valid. Finally, open communication with the workforce is critical informing them of this sudden nationwide temporary halt on the law.