As of November 22, 2016, a federal judge issued a preliminary injunction that temporarily halts the new overtime regulations from taking effect on December 1, 2016.
What does this mean for Employers?
For right now, the overtime rules will remain the same. Which means that employers do not need to pay overtime to employees when both the duties test is met and the minimum salary threshold of $455 per week.
Has this matter been permanently decided?
No, simply put, the changes have been put on hold until the court makes a decision. As stated by Judge Amos Mazzant of U.S. District Court for the Eastern District of Texas,
“…..it is a preliminary injunction, not a permanent one, and it does not necessarily mean that the new rule will be gone forever, either in its current form or in some revised form…. ”
Should Employers Halt Their Planning Process?
In many cases it is advisable for employers not to halt their planning process. As of right now, the changes to the overtime rules have only been temporarily halted. Employers who wish to be ready when (or if) the changes take place will need to continue their planning process.
Additionally, for many employers, the planning process has exposed situations where employers were not in compliance with the current overtime rules. For example, many employers became aware that some of their exempt employees where in fact non-exempt, based on the duties test but had been mistakenly classified as exempt based solely on the employee’s salary. Therefore, it is advisable for employers to either continue the process or to modify the planning process to at least ensure that the employer is in compliance with the current overtime rules.
What should Employers Do about Changes That Have Already been Implemented?
Decisions about what to do about modifications and changes to company policies and individual employee’s exemption status or salary level should be made on a case by case basis for each decision.
Specially, employers should carefully consider if they will be in compliance with the current overtime regulations if they undo modifications made to comply with the December 1st changes. It’s advisable to make sure that each employee is qualified to be exempt and that previous company policy is in compliance with current overtime rules. For many employers, the new rules brought about realizations that some employees should not have been exempt under the old rules and that older company policies were not always appropriate.
Additionally, employers should consider how drasticly they needed to modify salary or company policy to comply. For example, minor salary bumps or expensive modifications to how a company tracks time worked may be reasons to consider leaving the changes in place. It may not be prudent to undo changes that may need to be re implemented shortly.
Employers Advantage is an HR Company that provides Human Resources Consulting services and does not intend to give legal advice.