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How Should Employers Handle the Overtime Rule Injunction?

by Pat Collopy on Nov 23, 2016 3:27:10 PM

On Tuesday, November 22, a federal court blocked implementation of the “overtime rule” that would have made an estimated 4 million more American workers eligible for overtime pay starting December 1.

It is important to remember that this injunction is temporary – it may be implemented at a later date.

Many employers have been making preparations to comply with the December 1 implementation date for months. Not knowing whether the ruling will be implemented – or even when, creates many dilemmas.

Under the new regulations, the minimum salary would have increased from $23,660 to $47,476 required for employees to meet the “white collar” exemption salary test to be exempt from the federal law’s overtime and minimum wage requirements.

As a result of the court injunction, employers are no longer required to meet the new overtime salary minimums, and may continue to follow the existing Fair Labor Standards Act (FLSA) salary test regulations in determining whether an employee is qualified as exempt from overtime ($455/week and $23,660 year).

There are many uncertainties about what may happen with the ruling. Some experts are speculating that the new, higher salary level requirements may never become law.

If you were waiting until December 1st to implement changes at your organization, then you have the option of awaiting a final determination on the fate of the rules.

However, if you have already raised employees’ salaries in order to maintain their exempt status it may be difficult to undo the change or communicate that the change will not be made.

Employers still need to be sure all employees are properly classified under the current ruling and the FLSA’s exemption requirements duties test, and should review actual job duties to ensure they qualify under the executive, administrative, professional, computer or outside sales exemption.

We will continue to track the developments of the overtime rule and provide updates on managing changes you may have made in anticipation of the ruling going into effect.

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