Update - Department of Labor Final Overtime Rule Postponed

***** UPDATE *****

DEPARTMENT OF LABOR

FINAL OVERTIME RULE POSTPONED

On November 22, 2016, U.S. District Court Judge Mazzant of the Eastern District of Texas issued a preliminary injunction, temporarily barring the new Fair Labor Standards Act (FLSA) Final Overtime Rule from going into effect. The overtime rule was scheduled to take effect on December 1, 2016 and would have raised the salary threshold from $23,660 to $47,476. The rule also provided for triennial adjustments based on the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census region. Although the minimum salary increase has been postponed, the “white collar duties” tests under FLSA must still be met in order for an employee to be properly classified as exempt.

 Twenty one states filed an emergency motion for a preliminary injunction in October to halt the rule. They claimed that the Department of Labor exceeded its authority by raising the salary threshold too high and by providing for automatic adjustments to the threshold every three years. The states’ case was consolidated with another lawsuit filed by the U.S. Chamber of Commerce and over 50 other business groups which raised similar objections to the rule. The injunction applies nationwide, including all of those states that were not even parties to the lawsuit.

The Court ruled that the Department of Labor overstepped its boundaries in issuing the new regulation and also deemed that changes in the Final Rule were inconsistent with the congressional intent of the existing overtime laws. Judge Mazzant further stated that any changes to the Fair Labor Standards Act must be done by an act of Congress.

For now, the overtime rule will not take effect as planned on December 1, 2016, but it could still be implemented later down the road. Employers may now, for the foreseeable future, continue to maintain their current salary structure for their exempt employees (assuming they are not earning less than $23,660 per year) until this matter is resolved. If you have any questions or require further explanation, please contact our office at 717-267-2100.


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