Federal Judge Stops Overtime Rule Week Before It Goes into Effect

Recently, we took a look at preparing for the 2016 changes to overtime regulations and what that means for companies. However, just before these changes were to take effect on December 1st, a federal judge stopped implementation of the rule in a surprising and sudden move. With so much instability surrounding this law, it’s necessary to take a step back and assess the environment.

What Does This Mean?

In short, this injunction completely stops the new law that would have changed parameters on which employees are required to be paid overtime. Current FLSA law outlines a salary level and duties test that determine if an employee is eligible for overtime pay. At face value, the new law would have changed the salary eligibility threshold to effectively bestow instant overtime benefits to a large number of workers. Over the course of the first year of implementation, the new requirements were expected to grant overtime benefits to over four million Americans.

While this is unwelcomed news for those workers that were counting on additional income, they may not be worse off for this injunction. Some employers may have planned to take measures to avoid paying overtime, such as reclassifying positions or duties. Many workers hoping for the coveted overtime pay may have never seen it anyway.

As far as companies are concerned, it means that the current laws they have been operating under will remain for the foreseeable future. While it is likely that many organizations had concrete plans in place for the changing laws, they can at least take comfort in the fact that they are very familiar with current regulations.

What Happens Next?

This sudden judicial act makes it clear that nobody can predict the future, but there are distinct ways to move forward. Organizations should stay the course within the current law that they have been working with, but also would be wise to keep an ear out for news. Given this sudden injunction, there is likely going to be a great deal of discussion among lawmakers regarding where the law goes from here.

It may take time for this law (or a similar iteration of it) to see the light of day, but staying prepared for an eventual change can help avoid issues later on. A judge would not have stopped this overtime rule so suddenly without cause to believe that various lawsuits against the rule had a probability of being valid. In fact, the judge believes congress intended the overtime rule to apply to only duties, without a minimum salary level test. This indicates we may see a very different law eventually take shape, and that can take time.

As long as an organization continues to follow current laws, listens for updates from the government, and stays open to future change, this news does not need to cause alarm or disruption. Any changes to current legislation will be preceded with a clear notice and the expectation of enough time to adapt to them before they are formally implemented into law.

If you’re concerned about how this change affects your organization, contact us for a complimentary consultation and download our complimentary Ultimate HR Compliance Guide today.

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