Overtime Rule Enforcement Delayed

The proposed changes to the FLSA provision governing overtime pay have been a major concern amongst small and larger businesses nationwide. The most controversial proposed change involved the increase of the “salary test” threshold from $23,660 to $47,476. Essentially, this would mean that any salaried worker making below this new threshold could be a viable candidate for overtime pay, regardless of the worker’s job duties. This proposed change has left many employers considering changes to their scheduling and compensation policies. The new overtime rule was scheduled to go into effect on December 1, 2016.

In late November of 2016, a Texas Federal Court issued a nationwide order preventing the planned implementation of this policy. In State of Nevada, et al v. United States Department of Labor, et al, the Texas Federal Court granted injunctive relief to the 21 states (and more than 50 business organizations) bringing the action by enjoining the Department of Labor “from implementing and enforcing” its new rule. While the court rejected the movant’s argument that the new policies were unconstitutional, the court did find that the federal government’s actions violated the Fair Labor Standards Act by supplanting the “duties test” with a “de facto salary-only test.” Ultimately, the Court found that the new law disregarded the law’s previous intention of considering both the salary and the duties of an employee when determining the exemption status of the employee. This decision is currently being appealed and will be a strongly contested issue from a legal, economic and political standpoint for the near future.

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