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New overtime rules blocked, won’t take effect on Dec. 1

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in Centerpiece,Human Resources,Overtime Labor Laws

OvertimeA federal judge in Texas has temporarily blocked the Department of Labor's new white-collar overtime rules from taking effect on Dec. 1. A preliminary injunction issued Nov. 22 means employers only have to pay overtime to exempt workers who make less than $23,660 annually—not $47,476, the salary threshold set out in final rules issued in May.

U.S. District Judge Amos Mazzant's ruling for now denies overtime pay to an estimated 4.2 million additional workers. It throws into confusion HR and payroll plans to implement the new rules in just a few days.

Employers should proceed with caution, advises Steve Pockrass, who chairs the wage-and-hour practice at the Ogletree Deakins law firm. Since there is no guarantee the new OT rules are gone forever, continue planning for eventual implementation.

Pockrass says employers “that already have made changes will need to decide whether it makes business sense to suspend, alter or reverse those changes pending any subsequent legal developments.”

Thousands of employers have spent recent months raising white-collar workers' pay, changing exempt/nonexempt classifications, rewriting job descriptions and altering schedules and reporting relationships to adjust to the new salary threshold.

Many of those changes will be difficult to undo, and smart employers are taking a wait-and-see approach. Reversing course too soon could badly damage employee morale.

Mazzant's order, although temporary, signals that he believes 21 state attorneys general and a coalition of business groups that sued to stop the overtime rules have a strong case. "The State Plaintiffs have shown a likelihood of success on the merits because the Final Rule exceeds the Department's authority," Mazzant wrote.

The lawsuit, filed in the U.S. District Court for the Eastern District of Texas, argues that the Fair Labor Standards Act does not allow the DOL to rely solely on the salary threshold to decide who is eligible for overtime pay. The suit contends any overtime pay revision must also address the duties test that defines who qualifies for the FLSA’s executive, administrative, professional exemptions.

Mazzant wrote that the new overtime rules’ "significant increase to the salary level creates essentially a de facto salary-only test."

The new rules explicitly left the duties test unchanged.


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