Tips for Navigating Uncertainty on DOL Overtime Rule
A federal judge in Texas in late November temporarily blocked the overtime rule scheduled to go into effect December 1, causing confusion among employers and putting in doubt one of President Obama’s top regulatory initiatives.
The rule would have extended overtime pay to more than 4 million workers by requiring employers to pay overtime to most salaried workers who earn less than $47,476 annually; the salary threshold has been $23,660.
Experts say the litigation and possible appeal process is likely to drag out until the inauguration, which means President-elect Donald Trump could scrap the overtime changes.
“Mr. Trump and his hand-picked secretary of labor will have a lot to say about whether the DOL will continue to pursue the rule in one form or another,” said Ryan Glasgow, a partner at the Washington, D.C., law firm Hunton & Williams.
Labor attorneys Joe Schmitt and David James, who are shareholders at Nilan Johson Lewis and resources to Association members, offer this advice:
- For employees who were going to be reclassified as nonexempt, the client should hold off on that reclassification for now. Better to avoid the burden of changing the employee’s status if possible; and once you convert to nonexempt, it is very difficult to convert the employee back to exempt.
- For employees who were going to receive a raise, clients are split. The downside to delaying a raise is the impact on morale. Some clients are proceeding with the raise, reasoning that they would rather avoid the negative impact on morale. Some clients, however, are willing to bite the bullet and take the morale hit. That’s a business decision. Legally, you can delay the raise.
- For employers who have already provided a raise, there is a state law issue. Some states (e.g. Missouri) prohibit wage reductions without appropriate notice. So the employer needs to be careful about reducing wages in those states.
Source: The Hill, Nilan Johnson Lewis