A federal judge has issued an injunction to temporarily stop the United States Department of Labor (“DOL”) from implementing its new federal overtime rule nationwide. This rule would have doubled the Fair Labor Standards Act’s (FLSA’s) annual salary threshold for exemption from overtime pay from $23,660 to $47,476 effective December 1, 2016. “A preliminary injunction preserves the status quo while the court determines the [DOL’s] authority to make the final rule as well as the final rule’s validity,” wrote Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas in a Nov. 22 ruling.
What does this ruling mean for employers? For now, until and unless this judge lifts the injunction or an appellate court orders that the injunction be lifted, the salary threshold for exempt status under the FLSA shall remain at $23,660 (and the corresponding salary threshold for exempt status for employers in Connecticut shall remain at $24,700 annually). So, after December 1, 2016, as long as employees continue to be paid a salary of at least $24,700 in Connecticut and they continue to perform duties that otherwise qualify as exempt from the overtime rules (such as executive, administrative/management and/or professional duties), employers will not need to increase their salaries and/or change their status to hourly, non-exempt workers.
For those employers who have already either raised exempt employees’ salaries to meet the new threshold or reclassified employees who are still earning less to nonexempt status, you still may choose to leave those decisions in place if it would be difficult to reverse course from an employee relations’ perspective. But, if there are exempt employees who were going to be reclassified to nonexempt, but haven’t been reclassified yet, employers can postpone those decisions and give the litigation process further opportunity to fully resolve one way or another.
At this point, it is unclear whether the overtime rule will be permanently barred or perhaps altered in some manner before being allowed to take effect. Therefore, employers need to closely watch this evolving situation and maintain a contingency plan in place to move forward quickly as may be necessary in the future if the temporary ban gets lifted.
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