Many of you are already aware that in May of 2016 the Department of Labor issued a final rule with significant changes to the Fair Labor Standards Act’s (FLSA’s) overtime rules. The new rules were set to take effect on December 1st of this year and many of you have been working diligently to make sure you are in compliance with these rules which would have approximately doubled the salary threshold for exempt employees.
In late November, a federal judge in Texas stepped in and put a halt to the implementation of the new rule by issuing a preliminary injunction. This stems from an emergency motion for preliminary injunction that was filed by 21 states which claimed that the DOL had exceeded its authority by raising the salary threshold too high and by providing automatic adjustments.
This basically means that everything will remain status quo while the court determines if the department really had the authority to make the rule and if the rule is valid.
So what changes for us?
1. While the court works to determine the validity of the rule, employers do not need to make any changes to their payroll structure by the December 1st deadline. There is still a possibility that the courts will allow the rule to move forward, but many things could evolve between now and then. We suggest that you be prepared to implement changes should the change go through, and keep in touch with Align to see how things might be amended with a new administration and the courts.
2. If you have already made changes, you may feel like you need to change back immediately. We suggest holding off for now and leaving your modifications in place. We understand that you may have raised salaries or started paying overtime and may want to revert back to your previous pay practices. However, frequent internal changes to pay policy is going to cause significant morale issues in the workplace and we do not know yet how this will end up. We suggest hanging tight and seeing how things turn out.
3. Continue to follow the changes. It looks like things are going to be interesting for a while, so you will want to stay abreast of what is happening. Here at Align, we will continue to monitor the changes closely and keep you up to date. If you have any questions, we are here to help; feel free to get in touch.