On November 22, a federal Judge in Texas enjoined the
U.S. Department of Labor from implementing its new overtime rules
throughout the U.S. – regulations which were to become effective
December 1. The new overtime rules made approximately 4.2 million more
workers subject to overtime compensation by stripping them of their
exemptions. This is a preliminary injunction only and the final ruling
will come in the months to come. In the meantime, employers need not
comply with these new rules which require employees to receive at least
$47,476 per year to enjoy the overtime exemption. Employers may wish to
put on hold any salary increases given to employees in order to satisfy
the higher salary test.
The Judge ruled
that the DOL's promulgation of these regulations exceeded its authority.
The Court appeared to say that the focus as to whether an employee is
exempted should not be on the amount of salary earned, but instead the
actual duties performed. But, for many years, a salary threshold
requirement has existed but only required an annual salary of $23,660.
The DOL stated
"We strongly disagree with the decision by the Court, which has the
effect of delaying a fair day's pay for a long day's work for millions
of hardworking Americans." Of course, these new regulations continue to
be extremely controversial and the 21 states and various trade
associations including the U.S. Chamber of Commerce appear to have great
resolve in stopping these new regulations from being implemented. This
case needs to be carefully watched because it also sets the tone for
further attacks on other rules and regulations promulgated by other
agencies during President Obama's term.
Based on this
federal Court case, employers need not comply with the new overtime
regulations on December 1 but should remain prepared to do so in the
event the decision of the federal Judge is modified or overturned. Most
importantly, in the last several months, I have met with numerous
employers in order to ensure compliance with the new regulations. This
exercise confirmed that many employers had misclassified employees as
exempt under the previous regulations. These employers should not delay
in reclassifying those employees previously misclassified. Remember, it
is estimated that 70% of employers are in violation of federal wage-hour
laws. Audit your wage-hour practices today!
additional information, utilize your Legal Services Plan. Contact
attorney Bob Dunlevey, OSBA Board Certified Labor and Employment
Attorney at (937) 223-6003.