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FLSA Overtime Regulation Implementation Blocked for 12/1 by Federal Judge

What Happened?
Long and the short of it – the mandate to increase salary levels for Executive, Administrative and Professional employees classified as exempt effective 12/1 was deemed “unlawful”! (ahem…among a few other things..read on)

But here’s what you need to know today:

  • For now, employers have no burden to make adjustments to the pay of exempt employees; however, the Department of Labor may appeal and implementation may occur down the road.
  • The incoming Trump Administration now has more time to make changes and potentially end the rule permanently, or issue a new rule with a salary threshold different than what was initially proposed.

Here’s More Scoop and Suggestions on What To Do Now:

Late yesterday a federal judge in the Eastern District of Texas ruled that the Department of Labor exceeded its authority by significantly increasing the salary level of exempt executive, administrative, and professional (“EAP”) employees and mandating automatic increases.

The Court noted that the salary level was purposely set low to screen out obviously nonexempt employees. In increasing the salary so significantly, the Court reasoned, the DOL created “a de facto salary-only test”, in violation of the Fair Labor Standards Act.

Do We Have to Move People to Non-Exempt or Raise Salaries to the $47,476 Threshold?

Well – after yesterday, the answer is no, at least not for awhile. As a result of the judge’s decision, the Court ordered that “a nationwide injunction is proper in this case.” Now the Department of Labor will probably appeal this, but for now – this big change in overtime and salary tests is “on hold”…and it won’t go into effect 12/1 as everyone planned.

What About the New Presidency?

With the Trump administration set to take over the Department of Labor in late January, it is quite possible that the rules will be further delayed, completely revised, or altogether thrown out once President Trump takes office. We’ll have to “wait and see”.

What Do We Do Now?

If you have already started implementation of the salary changes or moving employees to hourly/non-exempt to accommodate for the mandate, you can choose to return to your previous policies…FOR NOW…however, you may want to consider waiting until a final decision is reached in court or otherwise.

And for those of you who have been waiting until December 1 to implement the changes, you now have the option of holding on implementation until more decisions are made. But at the moment, you have options!

Communication to Staff:

If you do choose to wait to implement changes (which as of yesterday you can), we recommend communicating to your workforce that the expected changes are going to be delayed given yesterday’s court ruling, and let your employees know that you will continue to monitor the situation and make any required changes when and if required or as appropriate by management.

Don’t Forget:

The 12/1 changes impacted overtime and creating a minimum salary threshold for “exempt” employees. But don’t forget to keep aware that for a position to be exempt from overtime provisions, it must also pass a specific duties test. That has not changed.

We’ll have more info to come as it is announced…..promise.

Here Are Some Links If You’d Like To Read More About This:

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about the author: Integrity HR

Integrity HR's human resources blog is filled with expert advice (and sassy commentary) on those everyday employment issues that give business owners and managers HR headaches. From tips on how to retain key employees to how to write your dress code policy, our blog has all the HR resources you need. Problems we solve: HR Outsourcing, HR Consulting Projects, Professional Recruiting Services, HR Audit & Operational Review, Employee Training Programs, Compensation Consulting, Leadership Development & Coaching, Succession Planning.