In a last minute blow to the Obama Administration’s labor and employment legacy, a federal district court in Texas granted an emergency motion for preliminary injunction yesterday barring the Department of Labor from enforcing its revised overtime rules, scheduled to take effect on December 1, 2016. See decision here.
The final regulations were poised to double the salary level for employees deemed to be exempt from overtime under the Fair Labor Standards Act pursuant to the Department of Labor’s “white collar” exemptions.
Though I am in the midst of traveling with my family for the Thanksgiving holiday, the court’s sudden decision urges me to provide some swift thoughts and suggestions.
First, it appears that this injunction is nationwide and therefore would apply to all employers throughout the country.
Second, it is uncertain how long this injunction will stay in place. It may become permanent, but the regulations are now only temporarily stayed meaning the regulations will NOT become effective, as originally scheduled, on December 1st.
Third, for those employers who have already communicated salary and compensation changes in anticipation of the update, you can either still go through with the salary and compensation changes despite the ruling or, alternatively, delay or cancel the changes. If you decide to delay or cancel the changes, you will want to communicate something in writing to the affected employees (and soon) explaining the sudden change.
For those companies who have already changed compensation in anticipation of the updated regulations, it will be much more difficult to roll back the salary and compensation changes without causing a mutiny in the workforce. In that case, a business decision will need to be made as to whether it is worth rolling back the changes after compensation plans have already been made and implemented.
This is a lot to chew on days before the planned effective date for the updated regulations, but is likely welcome news for many employers as well. We will keep you advised of developments in this area.