Attorney Morgan A. Davenport discussed the recent Federal ruling that halted the progression of the new overtime rule proposed by the Department of Labor with The Indiana Lawyer. This new proposed rule would have doubled the Fair Labor Standards Act’s salary threshold for exemption from overtime pay. According to the publication, companies and employment lawyers who advise them had, in many cases, worked for months planning to comply with these new regulations affecting of salaried employees who are exempt from overpay.
The overtime rule, announced by President Obama and Labor Secretary Perez in May 2016, was scheduled to take effect December 1 and would have raised the salary threshold from $23,660 to $47,476. Since the initial announcement, companies and their employment attorneys have been organizing and planning to be in compliance with the new regulations. The delay in implementation could negatively affect such companies who were proactive in implementing compliance policies.
For clients, “The frustration still exists that they put all this work into it, and now they’re dealing with all this uncertainty,” said Davenport. For lawyers advising them, “It’s always frustrating to not be able to say, ‘This is exactly what has to happen,’” she said.
Davenport told the publication that some firm clients chose to implement the regulations because they put the time and effort into becoming compliant and they feel for a number of reasons it’s too difficult to reverse course now. Although clients are waiting to see what the appellate court and the next administration does, they are leaving those changes in place until there is more certainty.
For some, the frustration of uncertainty is compounded by the possibility of unnecessary higher costs because they tried to be proactive and implement in advance of the regulation’s December 1 effective date. Davenport noted, though, that if the injunction is overturned, the rule will be retroactive to that date, and employers could be liable for private lawsuits seeking unpaid overtime for the period the regulation was blocked by the injunction.
According to the publication, the DOL has appealed the judge’s ruling, but even with expedited briefing that the agency requested from the 5th Circuit Court of Appeals, the matter won’t be briefed before the new administration of President-elect Donald Trump takes office.