On November 22nd, a federal judge in Texas granted a preliminary injunction against the Department of Labor’s (DOL’s) new federal overtime rule delaying its implementation nationwide.
A lawsuit challenging the rule was filed by 21 states and a variety of employer groups. The rule was set to increase the exemption threshold to $47,476, more than doubling the current threshold. The rule also established a mechanism to automatically update the salary and compensation levels by tying the tests to the 40th percentile of weekly earnings for full-time salaried workers.
What to tell your employees?
The Seyfarth Shaw Employment Law firm urges employers to communicate honestly and openly with those employees while they decide what to do next. The firm’s website offers the following sample language:
“A federal court in Texas has issued an order that makes it uncertain how the FLSA’s overtime pay exemptions apply to employees who would be impacted by the new rules that were to go into effect on December 1. Because of the court’s order, those rules will not go into effect as expected. To ensure that it is able to follow the laws that govern how employees are paid under the FLSA, the company has revised its plans and will be reporting back to you soon about how this will impact you.”
HR’s Role
Many employers have either already raised exempt employees’ salaries to meet the new threshold OR reclassified employees who are still earning less than the threshold to nonexempt status.
If an employer has already provided increases to employees in order to maintain their exempt status, they will likely want to leave those decisions in place as it would be difficult to take back.
If there are exempt employees that would have been reclassified as nonexempt, but have not been reclassified yet, employers may choose to postpone those decisions and let the litigation play out.
Employers shouldn’t assume, however, that the overtime rule will be permanently barred. The DOL can appeal the ruling so employers should still have a plan to move forward if necessary in the future.
Naphar Isley, CCP, GRP, PHR
