On November 22nd, a federal judge in Texas placed an injunction on the new Department of Labor (DOL) overtime regulations, which were slated to go into effect on December 1, 2016. The judge ruled that the DOL likely overstepped its rule making authority by raising the salary threshold as high as it did and by implementing the automatic increase every three years.
The Justice Department appealed the injunction on Dec. 1, but many believe the Trump administration is unlikely to pursue the appeal.The DOL regulations, among other things, would have raised the salary threshold for exempt employees from $23,660 to $47,476 with increasing adjustments every three years. The timing of the injunction has put some employers between a rock and a hard place. The employers most affected are those that had already begun making changes and, more importantly, communicating those changes to employees.
What this means now
The judge has not made a final ruling in the case, but the fact that he issued the injunction suggests that he is leaning in favor of the groups that want to stop the rule changes. It is also possible that his final decision will allow some parts of the rule to stand but not others. The DOL has indicated that in the meantime they are considering their legal options with respect to the preliminary injunction.
Employers are obviously wondering whether they should move forward with the changes they have been planning. Unfortunately, this is a difficult question to answer and ultimately a business decision, which is much harder than a compliance decision. Although employers are not required to make changes, they may want to consider the following:
- Will it hurt the bottom line to make the changes? If so, how much?
- Will it be difficult to undo changes that have already been made?
- How will employees feel about the decision? Did they like the changes? Hate the changes?
- Is the new pay structure better than what is in place now?
- If the changes aren’t implemented now, will it be possible to make them on short notice in the future?
At this point, we do not know how long the injunction will be in place or if the rules will be thrown out entirely. We will issue further alerts when actionable information is made available.
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“Federal Overtime Rules on Hold” The HR Pros / November 2016
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