The Overtime Rule Has Been Blocked. Now What?

Until a final decision
is reached, employers may follow the existing rule

Photo Source: BenefitsPRO

A federal judge in Texas has blocked
the Department of Labor’s (DOL’s) new federal overtime rule, which would
have raised the Fair Labor Standards Act’s (FLSA’s) salary threshold for
exemption from overtime pay from $23,660 to $47,476.

Judge Amos Mazzant of the U.S. District Court
for the Eastern District of Texas granted a preliminary injunction on Nov. 22
in a lawsuit challenging the DOL’s authority to raise the salary threshold. For
now, businesses and employees are in a holding pattern.

FLSA Overtime Rule

“A preliminary injunction preserves the
status quo while the court determines the department’s authority to make the
final rule as well as the final rule’s validity,” Mazzant said.

What does this mean for employers? Here are
some questions HR professionals may be grappling with in the aftermath.

Does my company still have to do anything by the Dec. 1

The short answer is no. For now, the overtime
rule will not take effect as planned on Dec. 1, so employers may continue to
follow the existing overtime regulations. 

Is this a final decision that permanently puts an end to the

No. The overtime rule could still be
implemented later down the road. 

A preliminary injunction isn’t permanent, as
it simply preserves the existing overtime rule—which was last updated in
2004—until the court has a chance to review the merits of the case objecting to
the revisions to the regulation. 

However, the revised regulation may face an
uphill battle: The judge wouldn’t have granted the preliminary injunction
unless, among other things, he thought the challenge had a substantial
likelihood of succeeding. 

Can the Labor Department challenge the decision?

Yes. The department said in a statement that
it is currently considering all of its legal options. 

The “overtime rule is the result of a
comprehensive, inclusive rulemaking process, and we remain confident in the
legality of all aspects of the rule,” the DOL said. 

Does this ruling apply to all employers nationwide?

Yes. Because the overtime rule would apply to
all states, the judge decided to apply the injunction nationwide.

“A nationwide injunction protects both
employees and employers from being subject to different [executive,
administrative and professional] exemptions based on location,” he said.

What should I do if my company has already either raised exempt
employees’ salaries to meet the new threshold or reclassified employees to
nonexempt status?

Employers will likely want to leave decisions
in place if they have already provided salary increases to employees in order
to maintain their exempt status, said Alfred Robinson Jr., an attorney with
Ogletree Deakins in Washington, D.C., and a former acting administrator of the
DOL’s Wage and Hour Division. It would be difficult to take that back. 

If there are exempt employees who were going
to be reclassified to nonexempt, but haven’t been reclassified yet, Robinson
said employers may want to postpone those decisions and give the litigation a
chance to play out.

“This should be a welcome sign for
employers, even if they’ve already made changes,” Robinson said.
“They can at least hold off on further changes.”

Employers shouldn’t assume, however, that the overtime rule will
be permanently barred. They should still have a plan to move forward if
necessary in the future.

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