Overtime law is delayed, so now what?? Back in 2016 the Obama overtime rule was put on hold and eventually, through court case filings was invalidated. Today, there is a new overtime law that goes into effect on January 1, 2020. For more information, check out recent blog posts on the new overtime law and what you should be doing to get ready.
Last week on November 22, 2016, a federal judge in Texas, issued a preliminary injunction stopping the Department of Labor’s (“DOL”) new overtime regulations from taking effect this Thursday, December 1st.
This rule increased the overtime exemption threshold from $23,660 to $47,467 – nearly doubling the previous threshold. Both the significant increase to the salary threshold and only the six-month timeframe to get ready for the switch laid a heavy burden on small business.
The court held that the DOL exceeded its authority and ignored Congress’s intent that the DOL is allowed to define the duties that qualify for the exemption, but Congress did not give the DOL the authority to change the minimum salary level. Thus, a change in salary level should come from Congress, not the DOL. Finally, due to the approaching effective date of the overtime rule, the Court decided that the public interest is best served by an injunction while the Court determines if the DOL had the authority to make the overtime rule and whether the overtime rule is actually valid. The ruling gives small businesses some breathing room.
So, what are small businesses to do now? Many small businesses have not made any changes to get ready for the overtime rule so business as usual for them. Other small businesses have taken action to comply with the overtime rule by re-classifying workers or changing salaries for certain employees. Do you rescind these changes? Or, do you proceed as planned? How will this play out with confused employees? These are all difficult business decisions that every small business must make based on their own workforce. For some small businesses, it might be best to move forward with the changes, especially if there were any concerns about potential misclassification of employees. For other small businesses where no pay increases were promised, you may be able to retract the changes with little effect to employee morale. It’s always a good idea to discuss your options with a small business attorney who can help you navigate through this uncharted territory.
As of today though, rest assured that no deadline is looming anymore for small businesses to comply with a harsh overtime rule. Dana Ball can help you navigate your requirements with classifying employees. Get started today!
Editor’s Note: This post was originally published in November 2016 and has been edited to include information about the new overtime rule effective on January 1, 2020, for accuracy and completeness.