10 days before the implementation date, a federal judge in Texas suspends the Department of Labor’s (DOL's) new federal overtime rules.
The overtime rule was scheduled to take effect December 1, 2016 and would have raised the salary threshold from $23,660 to $47,476 annually. The rule also provided for adjustments based on the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census region.
For now, the overtime rule will not take effect as planned December 1st, but it could still be implemented later down the road. Employers may continue to follow the existing overtime regulations until a decision is reached. It is important to know, the DOL released a statement confirming they will likely challenge the decision.
Many employers have already taken action and either raised exempt employees’ salaries to meet the new threshold or reclassified employees who are still earning less to nonexempt status.
Employers will likely want to leave decisions in place if they have already provided salary increases to employees in order to maintain their exempt status. Reversing salary increases or reclassifying employees again could be risky for employers.
Employers may want to hold off on reclassifying exempt employees to nonexempt until a final ruling is made.
Employers shouldn’t assume, however, that the overtime rule will be permanently barred. You should still have a plan to move forward if necessary in the future.
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