A recent federal court ruling has put anticipated changes to federal overtime rules on hold indefinitely. The amendments to the rule, which were due to take effect today, December 1, 2016, would broaden the class of employees eligible for overtime pay. Among other things, the changes were set to increase the minimum salary necessary for an employee to qualify for exemption from overtime as a white collar worker, and to implement automatic increases in this salary threshold every three years.
Although the ruling originated from a federal court in Texas, the decision has nationwide effect. The Department of Labor has been enjoined from implementing and enforcing the rule changes nationally until further notice. Employers throughout the United States who have been preparing to reclassify members of their workforce in response to the rule changes can, for the moment, put these plans on hold. However, employers who have determined that certain positions must be reclassified for reasons not affected by the court’s ruling (for example, the position duties do not fall within any of the white collar exemptions), should consider the risks of not reclassifying those jobs.
What comes next remains to be seen; the court’s ruling is preliminary and subject to additional litigation and appeals before it could become final. The rule changes could also be thwarted by political opposition from the incoming presidential administration and new session of Congress. The recent decision offers no guidance about whether the rule changes, if eventually implemented, would be retroactive in nature. Employers should be on the lookout for updates on this subject. They should be prepared to reclassify members of their workforce as necessary under the rule amendments if they ultimately take effect.