Overtime Update: Court Blocks New Overtime Rule

Posted by Amy Justice on Wednesday, November 23, 2016

A federal court on Tuesday blocked an Obama administration rule to extend mandatory overtime pay to more than 4 million salaried workers. The rule was set to take effect on December 1.

Granting a motion for a nationwide injunction, U.S. District Court Judge Amos Mazzant of Texas sided with 21 states and a coalition of businesses who contend that the rule is unlawful, and ruled that the federal law governing overtime does not allow the Labor Department to decide which workers are eligible based on salary levels alone.

Until the courts make a final ruling on the new regulations, existing overtime regulations remain in effect. "A preliminary injunction preserves the status quo while the court determines the department's authority to make the final rule as well as the final rule's validity," Mazzant said

So what does this mean for you?

Outfitters4 has been working with employers to aid them in making necessary adjustments in order to be compliant with the new overtime rule. Employers have implemented time and attendance systems, adjusted salaries, and modified schedules in preparation for this change.

For now, the overtime rule will not take effect on December 1st. But, as the Labor Department considers its legal options, the new rule could be implemented down the road. The preliminary injunction issued by the court isn’t permanent, as it simply preserves the existing overtime rule until the court has a chance to review the case and make a final ruling.

Employers will likely want to leave decisions in place if they have already provided salary increases to employees in order to maintain their exempt status or if they have already implemented time and attendance solutions for their employees. However, if there are exempt employees who were going to be reclassified to nonexempt, but have yet to be reclassified, employers may wish to postpone those decisions, but remain ready to move forward as the litigation plays out.

We will continue to monitor the situation and publish additional relevant information as it becomes available. Readers are also encouraged to stay abreast of the latest developments as reported by major media outlets. 

Please don’t hesitate to contact us if you have any questions.