For months, employers have been preparing for the U.S. Department of Labor’s (DOL) new Fair Labor Standards Act “white-collar” overtime exemption regulations, which were to take effect on December 1, 2016. Now, in a surprising decision issued on November 22, 2016, a Texas federal court issued a nationwide preliminary injunction blocking the regulations. The Court’s decision means that employers no longer have to comply with the new regulations by December 1.
What happens next remains to be seen — The injunction, which has not yet been appealed by the DOL, creates uncertainty as to the future of the regulations, particularly in light of the new incoming presidential administration. Should the DOL choose not to appeal the decision, or should the injunction be held up on appeal, the injunction could forecast the demise of the regulations.
What does this mean for employers? The answer depends on how far down the path employers have gone to comply with the proposed December 1 changes. To the extent that employers have not already increased exempt employees’ salaries or converted them to non-exempt positions, the injunction will at the very least allow employers to postpone those changes. And, depending on the final outcome of this legal battle, it is possible employers may never need to implement them.
Employers who have already implemented changes in anticipation of the new rules or that informed employees that they will receive salary increases or will be converted to non-exempt status effective December 1, 2016, are placed in a difficult situation with managing employee expectations and the changed legal landscape. Whether employers can or should reverse salary increases they have already implemented should be discussed carefully with your legal counsel.
For any questions on the status of the enjoined FLSA regulations or for legal guidance as to how to communicate with employees that those announced changes will not go into effect on December 1, 2016, please contact Amanda Lavis at ALavis@Rhoads-Sinon.com