Benefits Bulletin 08




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DOL Overtime Rule Update







On Nov. 22, 2016, the Department of Labor’s (DOL) overtime rule was halted by a preliminary injunction, issued by a federal judge in Texas. The rule, which was scheduled to take effect Dec. 1, 2016, would have increased the annual salary threshold for “white collar overtime exemptions” to $47,476.

With this rule halted, employers across the country can enjoy a reprieve from having to raise salaries for exempt employees to the new threshold or pay them overtime.

However, on Dec. 1, 2016, the last possible day, the DOL filed an appeal of the Nov. 22 decision. The parties’ final briefs on the appeal are due Jan. 31, 2017.  

Employer Takeaways

Employers should continue watching for new developments related to the overtime rule, given the uncertainty. Until a final decision is reached in the case, employers can rely on existing overtime exemption rules.

Employers that have already made adjustments to comply with the new rule may find it difficult to reverse any changes; however, employers may decide to postpone any changes that have not yet been made.

For employers looking to roll back salary adjustments, consider employee morale before rescinding promised changes. The HR department can be a valuable resource for communicating any changes to employees.

The Future of the Overtime Rule

Supporters of the rule remain committed to what they describe as fair increases in the overtime exemption salary threshold; however, the DOL may be facing an uphill battle in implementing changes to the overtime exemptions.

In his written ruling, the judge suggested that he would side with the parties challenging the rule when resolving the case. He stated that, in issuing the rule, the DOL “exceeds its delegated authority and ignores Congress's intent by raising the minimum salary threshold such that it supplants the duties test.

However, further steps need to be taken in the court process before the rule is permanently struck down. 

It is also possible that, once he is in office, President-elect Donald Trump could take executive action to block the rule, but it is not clear at this time what approach he would take to change or undo the rule. If the court strikes down the rule, further congressional or executive action may be unnecessary.

Other Issues for Employers

Although changes to the overtime exemptions may not take effect for some time (if ever), employers must continue to comply with current regulations. In preparing for the rule, many employers have discovered that employees may have been misclassified, which is an issue that must be addressed to avoid violating the current FLSA regulations. 



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