Most employers by now should be aware of the proposed changes to the Fair Labor Standards Act (FLSA) regarding who must receive overtime that were scheduled to become effective December 1. The basic proposed change is that the salary amount required for someone to be a salaried employee was scheduled essentially to double to $47,476 effective December 1. Under the rule that is now blocked, many employees would become hourly and need to track their time or receive a raise to the new minimum.
Twenty-one states and various business interests sued the Department of Labor over the rule, alleging that the salary threshold is too high and that the Department of Labor exceeded its authority in indexing it. The judge held a another hearing November 28 and has officially blocked the rule’s implementation.
This means that for now, you do not have to follow the new rules and may not ever. At this point, it is unknown whether the rule will ever go into effect or be replaced with a new version.
Several things could happen at this point. For one, Congress could come up with a compromise that addresses the judge’s concerns and send the bill to President Obama to sign. In the current climate, this seems unlikely. Another possibility is that the DOL could appeal the Fifth Circuit, which would take until sometime in 2017 to receive a decision, at which point even if the injunction is lifted, there would still be ongoing litigation. A third option is that the DOL accepts the decision, at which point the judge would make it a permanent block. This seems unlikely as well, given the statements currently coming from the DOL. Regardless, the issue will likely be addressed in some way when President-elect Trump takes office.
We will keep you posted on further developments.