United States: OT Aftermath: FAQs On How Employers Should Respond To Overtime Rule Decision

Employers are returning from their Thanksgiving holiday weekend grappling with thorny questions following last week's surprising and momentous court decision preliminarily blocking the Department of Labor's overtime rule from taking effect. Here are some answers to your most pressing questions from our firm's thought leaders on the subject.

What Happened Last Week?

Earlier this year, the U.S. Department of Labor (USDOL) unveiled a package of revised regulations altering the compensation requirements relating to which employees may be treated as exempt from the Fair Labor Standards Act's (FLSA) overtime and minimum wage requirements under the "white collar" exemptions. Once effective, the minimum salary threshold you would have had to pay in order to characterize an employee performing the requisite work as exempt would have increased from $455 to $913 per week, which annualizes to $47,476 (up from $23,660 per year). Also, this amount would have been "updated" every three years (meaning that it would have likely increased with each update) with the first update scheduled for January 1, 2020.

But on Tuesday, November 22, right before the Thanksgiving holiday, a federal district court judge in Texas granted a preliminary injunction blocking the rule from going into effect just days before the December 1 effective date. In response to a series of legal challenges brought by a group of state attorneys general and business associations, Judge Amos Mazzant stated that it was improper for the USDOL to adopt a salary test that categorically excludes a substantial number of workers who meet the exemptions' duties-related requirements. A full summary of his decision can be found here.

What Will Happen Next?

"It's anyone's guess as to what will happen next," says Caroline Brown, a member of the Fisher Phillips Wage and Hour Law Practice Group. The USDOL and the Obama Administration probably believe that they have invested far too much time and effort in developing these regulations to simply let them wither away, so it is likely that the government will appeal the ruling. But it is difficult to predict the outcome of any appeal, especially because it is unclear whether the USDOL will appeal to the 5th Circuit Court of Appeals (overseeing federal courts in Texas) or, given the fact that the injunction was applied on a nationwide basis, whether it will seek relief from another court located in another jurisdiction.

If an appeals court reverses the judge's ruling, says Brown, no one can predict the effective date for the regulations. That court might set a new deadline, might decide that the rules are effective immediately, might direct the lower court to deal with the question of an effective date, or could even determine that the rules should be considered to have been retroactively effective as of December 1.

And, of course, the wildcard in all of this speculation is the impending transition to a Trump Administration on January 20, 2017. President-elect Trump has not given a clear signal regarding his position on the overtime rule. "We simply cannot predict how Trump's Administration will view this rule," says Brown.

If he wants to scrap the rule, he could order his new USDOL personnel to drop any appeal that is pending on January 20, which could effectively cement in the injunction blocking the rule from taking effect. But if an appeals court breathes new life into the rule before he takes office, it would not be so easy for him to reverse course. He would probably need to commence a new rulemaking process, subject to notice and comment, if he wanted to set lower thresholds for the salary requirement and eliminate the three-year update. How long and what form such a process would take, and what could or would be done in the meantime, says Brown, are currently unpredictable.

What If I Already Implemented Compensation Changes?

If you have already altered your compensation plans or revised your employees' exemption status in anticipation of the December 1 effective date, there might well be adverse employee-relations implications if you reverse course now. "It could be very dangerous for organizational morale for you to pull the rug out from under your employees and take back the raise they just received, especially right before the holiday season," says Lori Armstrong Halber, a partner in the Fisher Phillips Wage and Hour Law Practice Group

Furthermore, reversing action already taken could implicate state or local notice requirements that require advance notice before you adjust compensation levels, other wage payment laws, and even the contract law principles (or other common-law doctrines) of other jurisdictions, says Armstrong Halber. 

One alternative would be to take no further action until a final decision is reached in the courts, waiting to see what Congress and the incoming administration do. It is worth noting that  a series of measures currently sit before Congress hoping to prevent, stall, or alter the rules changes. While some of the proposed legislative changes would scrap or delay implementation, another would introduce more forgiving gradual increases on an annual basis for a several year period. While many were not happy with the USDOL's proposed rule, there remains a large group of observers, including some in Congress, who believe that the current $455 per week figure should be increased. For this reason, "I would not be surprised if there is some increase in the future," warns Armstrong Halber, "but we just can't predict what will happen."

What If I Already Announced Changes To Take Effect December 1?

If you had been waiting until December 1 to implement changes, remember that Tuesday's ruling might not be the last word. As discussed above, a later reversal of the preliminary injunction might restore the December 1 effective date. "If you had already communicated an intention to take particular steps that have not yet been implemented, you must weigh the advantages and disadvantages of going forward with the plan or putting them on hold for now," says John Thompson, another partner in the Fisher Phillips Wage and Hour Law Practice Group

Once again, to answer this question, you should consider the employee-relations impact, as well as the potential legal ramifications of electing to follow-through versus announcing that you will hold off for the moment, says Thompson.

What If I Have Not Announced Or Implemented Changes Yet?

While this might seem like the best position in which to be, don't be so sure that you are in the clear if you remain silent and take no action. After all, you still may face similar morale problems among your workers if you do nothing for the time being, especially if they become aware of the court decision and realize they were on the verge of a pay increase. And, of course, as described above, Thompson reminds us that "you might also find yourself playing catch up if an appeals court resurrects the revisions and rules that December 1 is still the effective date."

How Can I Best Stay Up To Speed?

For day-to-day developments, we will track the fate of the overtime rule by providing updates on our Wage and Hour Law blog. For breaking news, we will issue timely Legal Alerts; you can be sure to receive them by clicking this link subscribing to our legal alert service.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Lori Armstrong Halber
Richard R. Meneghello
John E. Thompson
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions