POSTPONED 12/1/16 EXEMPT OVERTIME INCREASE - WHAT NEXT?
As you are probably aware, a federal district court judge issued a nationwide "preliminary" injunction halting implementation of most of the U.S. Department of Labor's ("DOL") new overtime rule. Therefore, employers are required by the Fair Labor Standards Act to compensate executive, administrative and professional exempt employees at a minimum of $455 per week or $23,660 annually. (The postponed increase was $913 per week or $47,476 annually.)
So what should employers do now?
It is important to know that the injunction has not permanently halted this increase. The Department of Labor (DOL) has appealed and it is possible that the salary increase will still be granted. Unless the appeal is expedited, the earliest that the case will be heard is the end of January. If the DOL wins the appeal, the court could retroactively implement the wage increase back to 12/1/16. Therefore, it is advisable for employers who were going to switch employees from exempt to non-exempt to begin to track those employees work hours, in the event that these employees may work overtime and therefore need to be paid time-and-one-half for all hours worked over 40 beginning 12/1/16. Employers will then be able to promptly pay any overtime owed and potentially avoid wage violation penalties.
For those employers who already granted increases of at least $913 to their employees, if they look to reduce those employees' salary, it may have a negative impact on employee morale and lessen employee satisfaction overall. You need to assess if changing these employees' salary again is worth the risk.
At this point, effective communications will be important with your employees. Sending employees a memo that while all planned salary changes are halted pending further court action, our company will continue to monitor the situation and keep employees apprised of any developments.
Since we do not know what will happen with the minimum exempt salary, we will need to wait.
Any questions, please contact Lauren Brenner at 617-614-1271 or firstname.lastname@example.org.