What to Expect from the Delayed FLSA Changes Three Months Later
What are Employers Supposed to do Now About FLSA Changes?
Aren’t there still state and local laws to watch for now too?
It’s been three months and a “yuge” administration change has taken place since a U.S. District Court in the Eastern District of Texas handed down a last-minute injunction of the landmark 2016 Department of Labor (DOL) overtime rule changes. These changes were set to go into effect on Dec. 1, 2016, but the court blockage prevented the implementation of the new Fair Labor Standards Act (FLSA) rule that would have given an estimated 4 million more American workers eligibility for overtime pay.
As you probably remember, possibly painfully, many businesses had spent months preparing for the rule that extended the right to overtime pay to a huge number of lower-wage white-collar workers. Employers were forced to spend their Thanksgiving holiday weekend scrambling to figure out what to tell their employees just days before the regulation was set to take effect. The overtime changes seem unlikely to happen now that the new presidential administration, a proponent of deregulation, is in charge.
As we reported late last year, the injunction put many employers in a very difficult situation. Many businesses had already revised employee contracts ahead of the deadline, changed their management structures and told salaried workers they would need to be paid on an hourly basis. At the time, the DOL said it was considering legal options. The rule was technically put on hold, and employers were encouraged to stay up to date on information, in case the regulation was put back into motion, Tina Hamilton, PHR, president and CEO of myHR Partner, told The Morning Call in a report on the situation when it unfolded back in November.
From the article:
Hamilton said she received a couple emails from clients on Wednesday, wondering what they should do now that the rule has been put on hold.
“In essence, it’s almost worse than it was before,” she said. “While we would have loved six months ago for them to say, ‘Hey, we’re not going to pass this bill,’ that would have been fabulous. But once you start giving all these pay increases and changing people around and readjusting the entire business, what are you supposed to do?”
Well, [there are] a couple options, Hamilton and other experts said.
Where things stand with the new FLSA Regulations
According to a recent post by JD Supra, the new administration is widely expected to block the overtime rule change, either by allowing the legislation to die in the courts or by taking steps to repeal it. It is quite possible that the proposed federal rule will never end up going into effect. But that’s not to say that employers have nothing to worry about when it comes to overtime regulation changes, says the blog:
Nevertheless, employers should not become complacent; as the new administration takes deregulatory action, states and cities may fill in the gaps. Indeed, a handful of states have recently implemented regulations that set a significantly higher salary threshold than the federal rule.
In New York, for instance, regulations went into effect on December 31, 2016 that increase the salary threshold for exempt workers based on employer size and geographic location within the state. Significantly, the salary threshold will increase annually, culminating in a new salary minimum of $58,500 for all employers in New York City by December 31, 2019.
Other states are also taking steps to boost salary thresholds, according to the article. Employers need to be aware of which states and municipalities are enacting these types of legislative measures on their own, even as the possibility of the federal overtime rule change wanes.
Also keep in mind:
What are the Steps to DOL Compliance?
- As of right now, employers must continue to comply with the existing 2004 salary thresholds.
- For all those organizations that made changes to comply with the new overtime rules already, reversing them now could leave them possibly facing administrative and employee-relations issues. Some may come to the conclusion that leaving the changes in place is the best way for them to go, whether or not the rule changes ever do come to pass.
- Employers should watch what legislative measures their states and municipalities enact that mirror or take inspiration from the DOL’s stalled rule changes.
All this being said, once we have a new secretary of labor, things could all change again. Or not. It has gotten really hard to predict these sorts of things lately. Rest assured, however, that we will keep you posted on any developments that employers need to know, ASAP. That’s why if you haven’t already done so, consider following us on Twitter, LinkedIn or Facebook. We will make sure you stay informed on this and other important compliance issues.
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A comprehensive examination of your organization’s overtime situation is essential. You need to know what exactly to do now that the new DOL rulings have been blocked, and keep up to date on any further developments. Our overtime compliance services are thorough, targeted and done by experienced and knowledgeable HR experts. We offer support on how best to manage compliance in a way that makes sense right now, and in the long run. And we can help you communicate with your workforce as you work through these latest developments.