As the holiday hangs in the air of the U.S. so does uncertainty for employers. After all, next week is the implementation deadline for the DOL’s new overtime rule, and there’s still a tinge of precariousness around it all.
Back in the day there used to be only one, basic rule regarding employee overtime pay. The standard was that hourly employees got overtime for working more than 40 hours a week, while salaried employees got it for working more than 45. Over the years the types of employees, exemptions, and enforcements grew more complicated, and—well, now we’re here.
The new law aims to pick up the slack for employees whose employers have been overlooking their extra time put in. Under the old law, a full-time, salaried employee making $23,660 could be classified as “exempt,” and not entitled to overtime pay even if they worked more than 40 hours per week. Under the new rules, employers will have to pony up in some way. Either they will be paying more in overtime, or they will raise the salaries of their employees to the new “exempt” threshold: $47,476 yearly. Those on the “highly-compensated” exemption will also see a bump from the new rules after December 1. And as the current rule is written, these standards will automatically increase these thresholds every three years, starting in 2020.
Of course, that’s assuming all goes according to plan—as you surely know, the best laid plans of mice and administrative bodies often go to court. And the DOL’s new overtime rules are no exception.
Right now the regulations are facing a multi-pronged attack. The first, is the courts. Back in September, 21 states challenged the new rule in a Texas court. It was consolidated with a similar case from business groups and trade associations, and has been winding its way through Judge Amos Mazzant’s Eastern District of Texas court.
And now there are reports from last week that the court is considering issuing an injunction that would stop the overtime rules. Considering Judge Mazzant’s commitment to an initial ruling being issued on November 22 (today!), it seems at least probable that the overtime rule won’t go into effect on schedule at all.
While that may appeal to the procrastinating employer who wasn’t looking forward to ushering these regulations, Dan Schwartz of the Connecticut Employment Law Blog is still a bit skeptical that the laws will meet their permanent end in the courtroom.
“While I still think the lawsuit may be a reach, it doesn’t seem as far fetched as it did a few weeks ago. Earlier this week, a similar Texas court issued a permanent injunction prohibiting the implementation of the so-called ‘Persuader Rule’ from the NLRB. Government overreach seems to be a theme in Texas,” wrote Schwartz. Still, he says, employers ought to be careful about rolling out anything they might wish they could walk back if the regulations get held up. “I still think planning is very much in order. But if employers haven’t yet flipped the switch on their plans, they may want to hold out for a few more days to see if this Texas case leads to anything. Why? Because once you raise an employee’s salary, for example, it’d be very hard to roll it back.”
Which is a fair precaution to take, in the cold light of post-election America. Though there’s no way our new president-elect will be able to roll it back before the December 1 implementation deadline, there’s a possibility of Congress feeling more emboldened to take action against it. But as Alex Passantino writes for the Wage & Hour Litigation Blog even that likely won’t be in time to stop employers moving implementation forward:
A second pre-December 1 path to stopping — or at least delaying — the overtime exemption regulations is through Senator Alexander’s Overtime Reform and Review Act, S. 3464. That bill would — by statute, not by regulation — increase the salary level to $692 per week on December 1, 2016, then increase it again in 2018, 2019, and 2020 until it hit $913/week. The bill also contains special provisions protecting nonprofit, state and local government, and education employers from salary increases unless certain conditions are met. Although the Senate has been expected to take up the bill upon return to Capitol Hill, the short legislative calendar and the threat of a veto by President Obama pose significant hurdles to relief before the December 1 deadline.
Even if Trump comes out strongly against it, there’s no way his actions could have as much effect as the courts for employers in the short-term—especially not by next Thursday, as Matthew Cooper wrote for the Employment Law Worldview.
“Given President-elect Trump’s declarations regarding limiting federal oversight and drastically overhauling current federal government programs and regulations, there has been varied speculation regarding the overall impact on the Department of Labor. Indeed, it is very possible that regulations similar to the FLSA changes scheduled to go into effect next week could be modified drastically or removed altogether,” wrote Cooper.
“Once again, however, we will not know what changes employers will face until the policies are defined and begin to be implemented. And regardless of the impending changes, they will take time and will not immediately have an impact on the impending deadline.”
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