In House - The FindLaw Corporate Counsel Blog

With New Overtime Rules on Hold, What Comes Next?

On December 1st, the Department of Labor was set to implement the largest expansion of overtime pay in decades. The DOL's new "white collar overtime" rule would more than double the income threshold for overtime pay, raising the exemption line from $23,660 a year to $47,892, with automatic increases every three years. The expansion would entitle millions of new workers to overtime.

But, it might not be happening. Last week, a federal district court in Texas enjoined the implementation of the rules nationwide, following a challenge from Nevada and 20 other states, along with a host of business interests. What does that mean for you?

White Collar Overtime Rule Is Halted

On November 22nd, District Court Judge Amos Mazzant ruled that the Department of Labor overstepped its statutory authority when setting the new overtime threshold and triennial updates. The Fair Labor Standards Act exempts executive, administrative, and professional workers from the Act's overtime requirements based on the nature of their duties, Judge Mazzant found, not their income level. By basing the new overtime rules on income alone, the court ruled, the DOL went beyond the authority delegated to it by Congress.

"If Congress intended the salary requirement to supplant the duties test," Judge Mazzant wrote, "then Congress, and not the Department, should make that change." With that, the new rules were halted nationwide.

And Probably Not Coming Back

Of course, the Department of Labor's interpretation of the FLSA could be vindicated as the litigation continues, but there's another important deadline looming after December 1st: January 20th, 2017. That's the day Donald Trump will be inaugurated as president and a Trump-led Labor Department could give up on the rules altogether.

Even if the DOL continues to pursue an appeal, it's unlikely that the overtime rules will remain the same. "Now that these regulations have been put on hold, the likelihood of them going into effect as written is very, very low," Michael Jones, an employment lawyer at Reed Smith, recently told Law.com.

Thankfully, the new rules haven't been implemented yet, meaning that most companies won't be rolling back payroll changes they have already made. But, companies now must inform their employees that the expected overtime changes won't be happening anytime soon.

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