New Overtime Pay Rules Put on Ice

A federal judge in Texas has issued an order temporarily blocking the Department of Labor’s new white-collar overtime rules from taking effect on Dec. 1.

The sudden move is likely to throw a monkey wrench into many employers’ plans to either increase employees’ salaries or prepare to implement more stringent adherence to schedules in order to avoid paying overtime.

The preliminary injunction blocks the implementation of rules requiring employers to pay overtime to workers who make less than the new threshold of $47,476. So for now, the current $23,660 annual salary threshold will remain.

This close to implementation, the injunction is bound to confuse HR and payroll plans to implement the new rules in just a few days. Since many companies have already informed employees of pay raises or new work guidelines to fit within the new threshold, it may be hard to turn back.

Whatever you decide to do, you should move not make any rash moves. While you may decide to hold off on any adjustments, you should still be prepared for their eventual implementation.

It may be difficult to reverse those changes, and making any quick moves may also damage employee morale.


What happened?

The lawsuit that U.S. District Judge Amos Mazzant issued the preliminary injunction for argues that the Fair Labor Standards Act does not allow the DOL to rely solely on the salary threshold to decide who is eligible for overtime pay.

The suit contends that any overtime pay revision must also address the duties test that defines who qualifies for the FLSA’s executive, administrative and professional exemptions.

Mazzant wrote that the new overtime rules’ “significant increase to the salary level creates essentially a de facto salary-only test.” The new rules explicitly left the duties test unchanged.


What to tell employees

Seyfarth Shaw, an employment law firm, urges employers to communicate honestly and openly with those employees while they decide what to do next. It suggests informing them about the decision and that for now you’ve suspended any plans depending on how the lawsuit proceeds.

In a blog, the law firm recommended using this 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.”