Overtime Rule Blocked: Now What?

November 28, 2016

Late Tuesday, November 22nd, a federal judge issued an order that effectively pauses the new “overtime rules” that had been scheduled to take effect December 1, 2016. 

Late Tuesday, November 22nd, a federal judge issued an order that effectively pauses the new “overtime rules” that had been scheduled to take effect December 1, 2016. The ruling enjoins the Department of Labor from implementing or enforcing the new “overtime rules” on a nationwide basis “pending further order” of the court. It is important to remember that the ruling is not final. Rather, it is a preliminary injunction that suspends the new rule during the litigation or further order form the court.

It is very likely that the rule will ultimately be enforced because its promulgation could be found to be within the Department of Labor’s authority granted to it by Congress when the Agency was created. For more on the power of administrative agencies, see this post. However, at least for the time being, employers are granted a reprieve from the new rule. Thus, employers may continue to follow the “old” rules for now if they choose. But, what should you do? This is a tougher question that will depend largely on your particular situation. There is no one-size-fits all approach. If you have not notified your employees of changes that will be made to their pay or their classification status, then you may wish to hold off on implementing any changes until further notice.

On the other hand, if you have already implemented changes to comply with the new rules, such as raising salaries to maintain exempt status, you should carefully consider whether it is prudent to leave those changes in place, despite this ruling. There are many factors that should be weighed, such as employee morale and South Carolina state law on providing notice of decreasing an employee’s pay. For those employees that have been reclassified as “non-exempt” you may want to continue classifying those employees as exempt for the time being.

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