FLSA Overtime Rules Delayed

Prior to November 22, 2016, many in the Human Resources field had been abuzz about the enactment of the Fair Labor Standards Act (FLSA) Final Rule. For some organizations, months of preparation for the December 1st change included reviewing job descriptions, in order to determine the position’s exemption status, and making changes to employee salaries vis-à-vis the new exempt threshold. However, on November 22, 2016, Judge Amos Mazzant III enacted an injunction, successfully halting activation of the new FLSA rules. The preliminary injunction is based off the challenge by several states, business groups, and the U.S. Chamber of Commerce. The plaintiffs claim the DOL has overstepped its authority by raising the salary threshold for exempt status excessively high. Of course, this injunction raises new questions. What is the Department of Labor’s (DOL) response? What do organizations do in the meantime?

The DOL’s official response to injunction was as follows: “The Department strongly disagrees with the decision by the court, which has the effect of delaying a fair day's pay for a long day's work for millions of hardworking Americans. The Department’s Overtime Final Rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options.”

So what do organizations do in the meantime? While some may speculate that with a Trump administration taking office soon, this mandate may disappear. However, it may not be safe to assume so. The attempt to rollback this rule may not happen right away. There is also the possibility that the Trump administration could issue a smaller increase to the salary threshold than the one initially included in the Final Rule.

Notwithstanding these developments, Michael Maciekowich of Astron Solutions reminds us that the FLSA tests for determining position exemptions have not changed. It is better to be safe than sorry, as a previous court case in Kinkead v. Humana, Inc. demonstrates.

The court case involved a final rule to extend minimum wage and overtime protections to workers who work in live-in domestic services or companion services beginning January 2015. In very similar fashion to the current FLSA overtime adjustments, the companionship exemption enactment was postponed in January 2015, as a federal judge from D.C. struck the rule down, charging that the DOL was overstepping its authority. However, in October of 2015 the U.S. Court of Appeals for the District of Columbia reversed this district court order. Humana argued that they shouldn’t be liable during the period the companionship exemption had been vacated. The courts decided Humanawas liable.

Another aspect to consider is your city and /or state regulations. If adjustments for your organization’s city or state are equal to or higher than the Final Rule’s regulations, organizations would still need to be in compliance with the law that’s most generous to the employee. As always, it is best for organizations to seek legal counsel in order to assuage any concerns from both employers and employees.

What was your organization’s reaction to the late initiated injunction? We look forward to hearing our readers share their input and thoughts on this late-breaking news!