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FLSA Changes "On Hold"

Publication Date: 11/29/2016 9:24:24 AM

Texas Federal Judge Blocks New Overtime Rule

Last Tuesday, November 22, a Texas federal judge entered a nationwide injunction, blocking the U.S. Department of Labor from implementing a controversial rule that expands overtime protections.

The judge said the measure improperly created a salary-level test for determining which workers fall under the Fair Labor Standards Act’s (FLSA’s) “white collar” exemption.

“A preliminary injunction preserves the status quo while the court determines the department’s authority to make the final rule as well as the final rule’s validity”, the judge said. The new law would have raised the FLSA’s salary threshold for exemption from overtime pay from $23,660 to $47,476.

What does this mean to employers? Simply put, the overtime rule that exists today will remain in effect after December 1, 2016 until further rulings by the courts. Considerations for employers include:

  • If salary increases have already been provided in order to maintain the employee’s exempt status, employers may want to leave those decisions in place, as it is difficult to take back salary increases.
  • If there are exempt employees who were going to be reclassified to nonexempt, but have not yet been reclassified, employers may want to postpone those decisions until a final decision is rendered.

IMPORTANT NOTE: A preliminary injunction is not permanent. It simply preserves the existing overtime rule until the court has had a chance to review the merits of the case that is objecting to the revisions to the regulation. Twenty-one states have filed lawsuits against the FLSA new regulation.