On November 22, 2016, Texas Federal Judge Amos Mazzant issued a preliminary injunction blocking the much anticipated Department of Labor changes in overtime regulations which were to be effective on December 1, 2016. The injunction was imposed nationwide at the request of 21 states, the US Chamber of Commerce and other business groups.
Judge Mazzant stated that the Department of Labor overstepped its authority and that the new proposed rules resulted in “a much more drastic change.” He also pointed out that the substantial increase in salary threshold could lead to inconsistent treatment of workers who each fulfill white collar duties, but are paid differently. “If Congress intended the salary requirement to supplant the duties test, then Congress, and not the USDOL, should make that change.”
It is important to note that on December 1, 2016, which was to be the effective date for these regulations, the Department of Justice, on behalf of the Department of Labor, filed a notice to appeal the preliminary injunction. Stay tuned.
What is a preliminary injunction?
The American Bar Association defines a preliminary injunction as a type of injunction that is meant to preserve a status quo of action or inaction, pending a final decision of a case. Preliminary injunctions remain in effect, unless otherwise modified or dissolved, during the pending court case. A preliminary injunction is not permanent.
What does this mean for companies?
For now, the DOL’s rule on increasing the salary threshold from $23,660 to $47,476 has been delayed. Employers should continue to follow current overtime regulations until a final decision is made.
If a company has already acted on the new regulations, consider leaving any salary increases provided. Taking back these increases would have a significant impact on employee morale. Regarding reclassifying exempt employees, consider holding off on these decisions until further notice.
Employers should not assume that the overtime rules will be permanently barred. The ruling delays the regulation’s implementation, but organizations should still have plans in place to move forward if needed. Open communication is critical and companies can share the new ruling with their employees to assure them that they are closely monitoring the situation and will communicate any changes if needed.
Tiffany Cardwell is a Principal Consultant on MCM’s HR Advisory Services team. Her expertise lies in over twenty years of experience in domestic and international human resources. She has expertise in acquisitions, change management, engagement, leadership coaching and development, performance management, compensation and total rewards, talent acquisition and workforce planning.
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