On Tuesday, November 22, 2016, Federal Judge Amos Mazzant issued a preliminary injunction on the Department of Labor's Overtime Rule. With this ruling, it puts a pause on the legislation as a whole. While employers will no longer have to meet the overtime rule, minimum salary threshold of $913 a week ($47,476) they should consider what next steps they will take.
While there are no longer requirements to raise an employee's salary from the current threshold of $455 a week, correct classification of an employee as exempt or non-exempt will be an important factor for all employers to consider. If the decision to reclassify employees was due to the employee not meeting the duties tests for exempt status, employers should continue with their reclassification to non-exempt. If the employee meets the duties test for exempt status and was previously scheduled to be reclassified solely for pay related reasons, employers may hold off on their reclassification's. (More information regarding salaried, exempt and non-exempt employees can be found here).
Employers who have already increased the salary amounts for exempt employees to meet the Overtime Rules minimum salary threshold should consider the risk involved with decreasing the employee's salary amount. Not only the potential legal risks associated with reducing their pay, but also the risk to employee morale. In addition, many states have specific requirements for notifications to employees if there are any changes to their rate of pay and/or pay frequency. If you were proactive with your compliance with the Overtime Rule, you will need to consider all of pros/cons/risks associated with reverting your changes.
Because this is a preliminary injunction to the Overtime Rule, it is unclear at this point what the permanent changes will be and how it will affect employers in the future. Remember to keep open communication with your employees, discuss changes as soon as practicable and keep an open mind.
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The content of this website provides practical and HR best practice information and is not legal advice. simplyHR LLC does not provide legal advice or other professional services. While every effort is made to provide accurate and current information, laws change regularly and may vary depending on the state and/or the municipality your business operates in. The information provided from simplyHR is provided for informational purposes and is not a substitute for legal advice or your professional judgement. You should review applicable federal, state and municipality laws in your jurisdiction and consult with legal counsel as you deem necessary.