US Department of Labor Overtime Rule Temporarily Blocked

Posted by: Mike Heffner  | Wednesday, November 23, 2016

Judge Amos L. Mazzant III, a federal court judge in Texas, issued a preliminary injunction on November 22, 2016 that temporarily blocks the U.S. Department of Labor (DOL) from implementing and enforcing its revised overtime regulations on a national basis. The regulatory revision would have more than doubled the minimum salary requirements to the federal Fair Labor Standards Act (FLSA). This regulation was set to become effective on December 1, 2016.

This ruling was a consolidated set of cases brought by 21 states and several business organizations. The cases where challenging the changes to the regulation which would have defined and delimited the standards for evaluating whether employees are exempt or non-exempt employees. Under the current regulations, the minimum salary requirement for these exemptions is generally $455 per week.  This annualizes to $23,660 per year. Under the revised regulations, the minimum salary would more than double to $913 per week and $47,476 per year.

What does this mean for employers? Well for now, this gives many employers some breathing room.  From the conversations I have had over the last few months with local employers and small businesses, this regulation has been a major struggle. Although many are celebrating this temporary win for employers and small businesses, I would share this caution.  This injunction does halt the revised regulations from becoming effective on December 1, but at this point, this is just a preliminary injunction.  We still don’t know for sure if this will become a permanent injunction, if the rule would reverse back to the original regulations, or if it will be revised under the Trump administration.  I am not sure we have seen the end to all of this and many things are possible in a case like this.  As an example, the judge could change his mind and lift the injunction or an appellate court could possibly overturn this ruling which could even mean the regulation could be retroactive to December 1, 2016.  Clear as mud on what to do, right? 

I am not an attorney, but the research and reading that I have done would seem to suggest that employers who have not yet made changes to their salary structure will have some additional time to continue with the planning process.  Those who have made the change will need to decide whether it makes sense to suspend the changes or stay the course and wait to see how this regulation develops.  Obviously any decisions should be made in accordance with any applicable state and/or local notice requirements. I am glad to see that this law, which was a major change for small businesses, might have some additional time to be vetted. It may also have time to receive input from our incoming administration, an administration that will be charged with enforcing whatever happens regarding this law moving forward.

This article is written by Mike Heffner, the owner of the local Greenwood Express Employment Professionals franchise.  Contact Mike at Mike.Heffner@expresspros.com, @IndySouthMike on Twitter or visit ExpressIndySouth.com.