Last week, Judge Amos Mazzant of the US District Court for the Eastern District of Texas blocked the Obama Administration's federal overtime rule that was set to go into effect this Thursday and affect up to 4.2 million white collar employees. Here’s what you should know as an employer and what to do about it.
The Fair Labor Standards Act (FLSA) includes an overtime exemption for salaried, white collar "exempt" employees that earn more than $455 per week or $23,660 per year. The new FLSA rule would have raised the overtime exemption threshold to $913 per week or $47,476 per year. In other words, anyone earning less than $913 per week would be due overtime pay if they work more than 40 hours per week.
An Uncertain Future for the Overtime Rule
While the nationwide injunction issued by Mazzant is a preliminary one, the rule faces an uncertain future. Mazzant has yet to issue a final ruling, which the US Department of Labor can appeal with the Fifth Circuit Court if it gets thrown out. However, the next administration seems unlikely to pursue this or similar measures, though individual states like California and New York may act on their own. As such, there is nothing that employers are required to do regarding overtime changes in California or anywhere else in the country for now, and many recommend taking a wait-and-see approach to see what happens in the courts, at the federal level and with the states.
If You've Made Changes...
You are currently under no legal obligation to reverse any changes made in anticipation of the new FLSA overtime rule being implemented. However, before doing so, you'll want to consider the effect of rolling back changes on affected employees and any costs involved to do so. Any overtime wages paid as part of changes made in anctipation of the rule cannot be recouped.