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,
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
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 Laboret 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.
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