Federal judge derails new overtime rule

The Department of Labor’s new federal overtime rule has been derailed by a federal judge in Texas.  This action came on November 22 and fell on the heels of several lawsuits filed by states and other special interest organizations.

This new rule would have doubled the Fair Labor Standards Act’s (FLSA’s) salary threshold for exemption from overtime pay starting December 1.  Specifically, it would have raised the salary threshold from $23,660 to $47,476 with adjustments to be made triennially.  

The new overtime rule may be implemented at some point in the future.  For the moment, employers have the option of proceeding to implement the related changes or reversing course and abiding by the existing overtime regulations. 

Our Take:

Staying the course makes particular sense to those employers who already have provided salary increases to employees in order to maintain their exempt status and have made such communications.  Reversing at this point may lead to employee morale issues that result in unintended consequences. 

Employers who did not plan for the December 1 implementation are advised to use this reprieve as an opportunity to prepare for its possible return.  We also advise that position reviews that are underway be completed ensuring the duties test as defined by the DOL is accurately updated and the correct classification is applied.  Keep in mind, this injunction is temporary and does not reverse or change the DOL ruling.

Any questions regarding this or other HR Issues, please contact our FLSA team.

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