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Overtime Rule Delay: What Does It Mean For You?

By March 29, 2017No Comments

Many business owners spent the second half of 2016 prepping and planning for the sweeping so-called “white collar” overtime rules to go into effect on December 1, 2016.

But a ruling at the end of November by a Texas federal judge put the proposed changes on hold. They have been on hold ever since.

This, with the recent moves to ease regulations, may signal a permanent block to the rule changes.
What does all of this mean for your business?

As recounted in this newsletter’s Winter 2016 issue by FOS attorney Mike Koutnik, on May 18, 2016 the Labor Department made drastic overtime rule changes for certain administrative and professional employees.

The new rules raised the threshold for exempting employees from overtime pay requirements from $23,660 per year to $47,476 per year.

By more than doubling the pay threshold, the new rules made millions of Americans eligible for mandatory overtime pay.

The federal court’s ruling staying the imposition of the rule changes left many employers and employees in the lurch.

Those that anticipated the rule change and gave (or received) raises to avoid the new overtime requirements, may be asking whether the increase in salary must be continued.

Does the court ruling harm businesses that were proactive in their approach to the rule change?

Does the benefit to employee morale outweigh any minor preemptive financial changes?

Those businesses that made the tough decision to move salaried employees to hourly positions, may be asking if it is legally safe to make the switch back.

How will employees receive that information? What if the court ruling is reversed or the rule changes again?

Practically, all those tough conversations and decisions about the new rule may now seem pointless.

As a matter of law, employers are currently only obligated to comply with the previous $23,660 threshold for mandatory overtime pay.

As a matter of principle, on the other hand, employers who made anticipatory salary changes will have to determine if it is wise, in business, employee morale and other senses, to return employees to their pre-rule status.

And, although not ideal, as a practical matter all we can do is wait and see, including whether the current administration supports, or more likely opposes, the now-in-limbo rules.