What’s going on with new overtime rules?

As many employers may already know, on Nov. 22, a judge in the United States District Court for the Eastern District of Texas entered an injunction temporarily stopping the U.S. Department of Labor from implementing its new finale rule regarding overtime, which was set to take effect Dec. 1.

To refresh the recollection of any employers who may have forgotten, the main points of the new overtime rules were to raise the salary threshold of exempt employees to $913 per week or $47,476 per year. The salary basis was previously $455 per week or $23,660 per year. Basically, employees making below the new salary threshold would no longer qualify for the professional, administrative or executive exemptions from overtime. The final rule also established a mechanism for automatically updating the salary threshold every three years. This had a big impact on the number of employees who would not be eligible for overtime for hours worked over 40 in a workweek.

While the implementation of the final rule is temporarily on hold, the Department of Justice, on behalf of the Department of Labor, appealed the court’s decision on Dec. 1. This means that employers and employees alike are waiting to see how the court rules as to whether the injunction will remain in force, and whether the final rules will ultimately go into effect.

This uncertainty of what will happen has left many employers wondering what steps to take next, and whether they should simply do nothing and wait to see how the court decisions shake out. However, there is some risk in this approach. It is possible that if the final rule is upheld, then courts could find that the rule is retroactively effective back to Dec. 1, meaning that employers could possibly have exposure for that period of time.

In anticipation of the changes, many employers had already begun instituting their salary changes and had communicated those changes to employees. Many of those employers have decided to move forward with their changes, due to concerns regarding employee morale and uncertainty since the injunction is only temporary at this time. Employers with questions about next steps, should contact an attorney of their choice.

This story was originally published December 5, 2016 at 4:58 PM with the headline "What’s going on with new overtime rules?."