Overtime Rules in Limbo

We last discussed the new overtime rules in August (“What Are You Doing About Overtime?“).  Since then, a new President has been elected, the Department of Labor (DOL) has been blocked from implementing the rules, and the Trump administration is now studying what to do about them.

The new rules were scheduled to take effect December 1, 2016, and would increase the salary threshold for determining whether a “white collar” worker is exempt from the Fair Labor Standards Act.  Exempt workers are not entitled to overtime when they work over 40 hours in a week.

In late November, however, a federal court issued an injunction that temporarily prohibits the DOL from implementing the new rules.  The DOL appealed the injunction, but further action will not be taken until at least May 1, during which period the Trump administration will consider whether the DOL should pursue the appeal.  If the DOL elects not to continue the case, a number of labor groups want to do so.  In short, the new rules are in limbo and have an uncertain future.

What does this mean for employers?  It may be best for employers simply to continue their present practices that comply with the proposed new rules, even if they increased salaries to meet the proposed salary threshold or if employees were re-classified from exempt to non-exempt based on wages below the proposed salary threshold.  So long as an employee meets the “duties” test for determining white collar status, though, it would be permissible to lower salaries or re-classify employees as exempt – taking into account possible impact on employee morale.

One positive outcome for many employers is that the issuance of the new rules prompted them to revisit employee classifications under the job duties test and re-classify affected employees to their proper status.  Those re-classifications will not be affected if the new overtime rules do not go into effect.

This article is made available by Corporate Counsel Group LLP for educational purposes only and to give you general information. It is not legal advice.