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 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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.