A federal judge in Texas issued a preliminary injunction yesterday, November 22, 2016, that prevents the implementation of the Department of Labor's Final Rule regarding new overtime regulations. This preliminary injunction is nationwide and will affect all employers and employees who were subject to the Final Rule set to go into effect next week on December 1, 2016.
You can read more about the preliminary injunction on our blog here.
You can also read more about the Final Rule on our blog here.
So what does this mean for you as an employer?
If you have already made changes to an employee's salary or exempt status to comply with the Final Rule you should not change their salary or exempt status back. Doing so at this point without a final ruling will cause more upheaval and administrative costs. If upon the final judgment or other resolution the Final Rule is not implemented, employers who change salaries or statuses can move employees back into their original positions under the 2004 legislation with the comfort of knowing that they have the final answer.
If you have not made changes to an employee's salary or exempt status yet but do have employees who would be affected by the Final Rule, you don't have to make any changes now. Instead continue planning and be ready to make any necessary modification to comply should the preliminary injunction be lifted or a final resolution implement the Rules.
All employers should continue to plan and look for updates on the matter. The preliminary injunction is just that - preliminary. The litigation will continue, the DOL will challenge the preliminary injunction and there must be a final judgment or other resolution amongst the parties. In the meantime, the preliminary injunction will stand and the current salary threshold of $23,660 will be in effect. If the States Plaintiffs prevail it is possible that the preliminary injunction could become permanent, that is the Final Rule will never be implemented and the current threshold will remain. However, if the States Plaintiffs fail to prove their case, the Final Rule could be implemented swiftly. The parties could also reach another resolution or the new presidential administration could intervene and propose a modified Final Rule. If such intervention occurs, resolution is unlikely in 2017.
This is a good time for all employers to evaluate all workers and their statuses. Employers can be investigated, fined and can incur civil costs for inadvertent overtime violations as well as misclassification of employees and independent contractors. If you have questions regarding the Final Rule or other employment matter please contact Kisner Law Firm.