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On November 22, 2016, Judge Mazzant of the U.S. District Court for the Eastern District of Texas issued a nationwide injunction against the Department of Labor (DOL) blocking its Final Overtime Rule, which was set to go into effect on December 1, 2016.
The injunction "preserves the status quo while the Court determines the Department [of Labor]'s authority to make the Final Rule as well as the Final Rule's validity." Moving forward, the Final Rule may face an uphill battle as the Court found the states challenging the Final Rule showed a "substantial likelihood of success on the merits."
This leaves many employers in a quandary. Employers who had plans to implement those changes must decide whether to postpone, temporarily or otherwise, those initiatives, proceed with the changes or see what develops down the line.
I believe the following guidelines provide some reasoned basis for dealing with this injunction and the uncertainty that it brings with it:
- Employers that have already implemented changes in anticipation of the new rules taking effect need to consider from a human resources standpoint the impact of reversing those actions. Taking away promised salary increases will inevitably lead to dissatisfied employees and employee relations problems. Employers need to weigh the "human" costs of that unhappiness against the cost of the salary increases.
- Employers that have not implemented changes are better able to take a wait-and-see approach. The injunction could well be modified or even lifted. If that happens, there is no way to know how long employers will have to comply with any revised standards.
- Employers must still be mindful of the duties test of the "white-collar exemption," which has not been altered. If employees are non-exempt, today, from a duties perspective, they will be non-exempt in the future, whatever the salary levels are raised or (or not raised to).
- As always, employers must comply with state-specific requirements for overtime exemptions, which may well include salary thresholds more than $455 per week, e.g. California, New York.
- Keep employees informed, whatever you do!
The Takeaway
In my humble opinion, I do not believe these new changes will be implemented, or, if they are, they might/will be diluted under the pro-business Administration that will be taking over in seven weeks.
To be continued...
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