Federal Injunction Blocks DOL Overtime Rule
Still scrambling to prepare for the new overtime rule? Then the holidays may have just come early. In an unexpected turn of events, on November 22nd, 2016, a U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction on the Department of Labor’s (DOL) new overtime rule. This move, which came just 8 days before the effective date of December 1st, 2016, nullifies the regulations set by the new overtime rule, pending further Court proceedings.
So What Does this Mean for Employers?
For now, employers nationwide can disregard the December 1st effective date of the new overtime rule. Under the injunction, the status quo will hold for overtime pay. This means that the “white collar” overtime exemption threshold (the line below which overtime pay is required) will remain at an annual salary of $23,660 rather than $47,476, which was proposed under the new rule.
What Can Employers Expect Going Forward?
For now, it is relatively unclear what will happen in the near future, as an injunction is only a temporary measure. It restrains the new overtime rule from becoming effective while the Court reviews the merits of the case and comes to a decision. There is speculation that the judge would not have granted an injunction without a high probability of overturning the new overtime rule. However, the DOL is planning to challenge the injunction stating, “the overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule.”
How Employers Should Manage This News
The timing of the injunction puts many employers between a rock and a hard place. Many of you have probably already taken action at your organizations to remain compliant with the new rule. If you have already made changes to employee salaries/pay structures, job classifications, company policies, and so on, it may be wise to leave them in place. The injunction is only temporary and reverting changes may cause compliance issues down the line. On the flip side, if you have changes that you were planning to roll out but have yet to, it would be best to hold off until the situation has had a chance to play out.
Maintain a Strategy for the Future
Most important for employers moving forward is to have a gameplan. Although the overtime rule is currently barred, it could very well become effective in the coming months or years and you need a strategy in place should this occur.
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