Days before employers around the country were poised to implement drastic changes to overtime and salary policies, a federal injunction stopped them.
“Overall the delay to the rule — which would make more than 4.2 million workers eligible for time-and-a-half wages — comes as a relief for many unprepared employers, particularly small business owners,” writes Amanda Eisenberg for Employee Benefit News.
The preliminary injunction came from a federal court in Texas, which ruled the Department of Labor exceeded its authority.
The expected changes would have meant those with salaries of $47,476 or less would be eligible for overtime, compared to the previous $23,660 salary limit.
However, it doesn’t totally stop rule changes, writes Christian Schappel for HR Morning.
“It simply halts them,” he writes. “Whether or not the rule changes take effect, and when, will be determined at a later date in court. The injunction sets the stage for a future court battle, during which the judge will rule on the merits of the states’ and business groups’ lawsuit against the Department of Labor.”
Some suspect President-elect Donald Trump’s administration won’t defend the Department of Labor’s position in court. Still, it “leaves employers in limbo as to what to do next,” Eisenberg writes. “But despite the uncertainty, experts say employers should go ahead with their compliance plans, should the rule go into effect.”
That way, employers can still be ready should the Trump administration pursue a smaller increase to the salary limit. Many were unprepared for the Dec. 1 changes.
“About 37 percent of small business owners said they aren’t ‘anywhere near ready’ for the overtime rule changes, and 67 percent said they do not have formal compliance plans in place,” writes Eisenberg, quoting online small business service directory Manta.
The ruling is a reprieve, though. It means decisions and changes don’t need to be made immediately, writes Lisa Nagele-Piazza for Society of Human Resource Management.
“If there are exempt employees who were going to be reclassified to nonexempt, but haven’t been reclassified yet, employers may want to postpone those decisions and give the litigation a chance to play out,” she writes.
And what if your company has already taken action?
“Employers will likely want to leave decisions in place if they have already provided salary increases to employees in order to maintain their exempt status,” Nagele-Piazza writes. “It would be difficult to take that back.”