On Tuesday, November 22, a federal judge in Texas effectively blocked the Department of Labor’s (DOL) overtime rule which was scheduled to go into effect as of December 1, 2016. The new rule raised the exempt salary threshold from $23,660 to $47,476 and provided triennial adjustments to the base wage.
The DOL’s authority to increase the salary threshold is being challenged by twenty-one states as well as the U.S. Chamber of Commerce and other business groups. The Texas court has issued a temporary injunction which will effectively pause the implementation date of the new ruling. At this time employers may continue to follow the current overtime salary threshold amounts of $23,660.
Many employers have already implemented the changes. Employers
can opt to continue with the changes that have been made or they can delay the changes until such time as they are officially mandated. Employers who have already made the adjustments to employees’ wages should use caution if they are considering reverting to their previous method of pay. Additional payroll changes could negatively impact employee relations.
The future of the overtime rule is uncertain. The DOL under the Obama administration will likely appeal the ruling, and it’s difficult to predict how long that might take. If this matter is not resolved in the next couple months, it may be up to the DOL under the Trump administration to decide whether to defend the new overtime rule.
The bottom line for employers is be aware of the recent ruling and stay informed about developments in the weeks ahead. When we do finally learn how this matter is resolved, there may not be a lot of time to comply with mandated changes.
If you have questions, please contact your KerberRose advisor.
This update has been provided by Melissa Olsen, PHR/SHRM-CP, Human Resources Administrator at KerberRose.
About the Author
PHR, Human Resources Administrator & Marketing Coordinator