Overtime Rule Blocked

Beth Dean 11.23.16
10 Typewriter Keys

UPDATE: The overtime rule has been blocked indefinitely. It is unlikely to be passed as is. Nextep will keep an eye on this situation and let clients know as soon as any final decisions or revisions are made.

A federal judge in Texas has issued a temporary injunction to block the rule that was set to put overtime reform into effect on December 1, 2016.

The new overtime rules were set to more than double the minimum salary at which an employee can be exempt from overtime pay from $23,660 to $47,476 annually. Additionally, there were to be automatic increases to the salary threshold every three years in line with national wage increases, beginning January 1, 2020.

As we reported recently, opposition to the rule argued that the change was too drastic, too much of a financial burden on employers, and gave too much power to the Department of Labor in issuing automatic increases.

A federal judge in Texas agreed, issuing late on 11/22 a temporary injunction to delay its December 1 effective date.

It’s important to note that the injunction is temporary, not permanent. However, without any efforts to revive it, the new rule may be indefinitely delayed.

At this point, employers are wondering what that means for them, especially after months of preparation and changes in order to comply. Here are two recommended options:

  1. Leave the changes intact, pending a permanent ruling, or
  2. Revert employees back to their old compensation structure, then make changes accordingly with the permanent ruling.

Companies who have not yet made changes can hold tight, pending the outcome of this case.

Any decisions or changes made by your company should be immediately communicated to employees.

As always, you are not alone. Nextep’s HR team is available for any questions and troubleshooting this will necessitate.

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