For more than a year, we have been warning employers that FLSA changes to the overtime exemption rules were coming. In May, we received news of the final implementation date of December 1, 2016. The changes to the exemption rules were significant and many efforts to derail or challenge their implementation failed, until, perhaps, now.
On September 20, 2016, twenty-one states led by Texas and Nevada filed suit against the Department of Labor and Labor Secretary Thomas E. Perez to attempt to stop the implementation of the new overtime exemption rules. According to the lawsuit, the new overtime exemption rules will force many businesses and local governments to increase their employment costs to meet the new overtime salary threshold of $47,476 per year. Employees across all sectors (private and public) will have to make at least that amount per year in order to meet the one of the requirements for one of the "white collar" FLSA exemptions. Clearly the clock is ticking for many employers who have had to change their pay scales or modify their overtime practices to meet the demands of the new rules by December 1, 2016.
In the lawsuit, the plaintiff states have outlined the monetary impact that such a rule will have on local and state governments alone. For example, in Iowa, the new rule will add approximately $19.1 million in additional costs to state government and public universities in the first year alone. The impact in other states is similarly burdensome. The lawsuit requests a declaratory judgment that the new overtime rules and regulations are unlawful as applied to the named States and, notably, temporary or preliminary injunctive relief from implementation of the rules by the federal government. If a temporary injunction is granted, the Eastern District of Texas court could stop the DOL from implementing the overtime rules.
So what does it mean for you and your workplace? For now, it's a waiting game. It's unlikely that the court will hold an injunction hearing and issue a decision before the December 1, 2016, deadline; but stranger things have happened. The best advice is to be prepared to comply with the overtime rule by the deadline, and let the courts decide where to draw the line down the road.
The case is Nevada et al. v. U.S. Department of Labor et al., case number 1:16-cv-00407, in the U.S. District Court for the Eastern District of Texas, currently assigned to the Honorable Judge Ron Clark.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
