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Federal Judge Halts the FLSA Overtime Rule from Taking Effect on December 1

CPAs & Advisors

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The U.S. Department of Labor’s new rule on overtime exemptions set to go into effect December 1, 2016, has been blocked by a U.S. District Judge who agreed with arguments made by 21 states and several business organizations, including the U.S. Chamber of Commerce. This nationwide injunction stops the rule that would have affected over four million workers who may have qualified for overtime pay.

Under prior ruling, workers who earned more than $23,660 per year, or $455 per week, were exempt from overtime if they performed managerial or professional duties. Under the new rule, the salary threshold was to be increased to $47,476 per year, or $913 per week.

How does this judgment impact employers?

This ruling is likely to remain in effect for the remainder of the Obama administration, yet it is unknown what actions the Trump administration will take.

  • Employers who have already made changes in employee salaries in order to comply will need to make the difficult decision to keep the changes in place or revert, keeping in mind that further changes may take place in the coming months under the new administration. Compliance steps that should not be changed back include updated personnel policies that may be more specific about cell phone use, travel time, etc., recordkeeping compliance updates, and confirmation that exempt employees met duty and salary requirements.
  • For those who have not implemented any changes, it may make sense to wait to make any changes until this is sorted out.

If you have questions or need assistance, please contact Yeo & Yeo.

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