A week before the DOL’s new overtime rule would have been effective, a judge placed a nationwide hold on the law.
The overtime rule would have required employers to either reclassify their employees as non-exempt or pay them at least $47,476 annually.
Judge Amos Mazzant, of the U.S. District Court in Sherman, TX, wasn’t happy with how the rule treated the white-collar exemptions within the original overtime law.
"The court held that Congress intended the white-collar exemptions to turn on an employee's duties, performance, and conduct, not on his or her salary," said Ryan Glasgow, partner at Hunton & Williams LLP.
In previous posts, we talked about how this law would affect employers and how to take steps to comply by early December. Now that there’s a national hold on the law, should we scrap our plans to comply? Not exactly.
The hold is only temporary for now and the future of the law depends on a few factors:
Judge Mazzant’s final ruling of the case
The DOL’s potential lawsuit appealing the ruling; and
The Trump administration’s take on wage and hour issues and employer/employee protection
Already made changes? Here’s what’s next.
If you’ve already taken steps to comply by raising the salaries of exempt employees or changing employees to hourly, you should consider the pros and cons before reverting back to your previous pay structure.
Michael Arnold, an attorney with Mintz Levin in New York City, told SHRM that while employers don’t have to revert back, they may want to consider the consequences.
"Employers have no legal obligation to unwind the changes," he said. "They will have to consider what costs they will incur if they do roll back the changes, including cost to employee morale and the administrative expenses. If those potential costs outweigh the possible labor-cost savings, employers may want to think twice before reversing."
Of course, certain industries will suffer more of a financial burden implementing the salary changes, so thoughtful consideration of all costs is important when making the decision to adjust salaries or employee statuses.
Haven’t made any changes yet? Hold tight.
Judge Mazzant’s hold on the law is probably good news to you if you haven’t already made the changes, but this may not be the end of the overtime rule.
Jones also advised: "Take it with a grain of salt, but a lot of the information out there suggests that the new administration is going to make some changes and may revisit the overtime rule. If employers haven't implemented any changes yet, they may want to wait and see what the final decision on this looks like."
We will keep our community posted on updates and changes that impact Wage & Hour rulings. In the meantime, feel free to access our free Wage and Hour Toolkit!
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