What does the decision to delay the implementation of the new overtime rules mean?

Most people have probably read that a judge in Texas has issued a preliminary injunction which preserves the status quo while the court determines the department’s authority to make the final rule as well as the final rule’s validity.  What does this mean?  The changes we have all talked about have been put on hold for the time being.  What will be the eventual outcome is very unclear.

The question many of you are probably asking is, now what do I do?

Some people were proactive and have already either raised exempt employees’ salaries to meet the new threshold or reclassified employees who are still earning less to nonexempt status.  Employers will likely want to leave decisions in place if they have already provided salary increases to employees in order to maintain their exempt status.  Taking back salary would be difficult to do.  If someone has already been reclassified as nonexempt you may want to just continue on that path rather than continue to switch them back and forth.

If there are exempt employees who were going to be reclassified to nonexempt, but haven’t been reclassified yet, you may want to postpone those decisions and give the litigation a chance to play out.  The same could be said if you had an employee that was close to the $913 per week and your intent was to increase them, but you have not communicated that yet.

We still recommend that you use this as an opportunity to review any exempt employee to make sure you believe their actual job duties qualify them under one of the exemptions listed in the Act.  That part has not changed and a number of people have discovered through all this that they had people classified as exempt that really did not meet the requirements and should have been nonexempt to begin with.

You also should continue to look at tracking hours properly.  This also has not changed. Nonexempt employees are often making phone calls during off hours, reading email at home, doing work during their lunch hours and not properly accounting for those hours.  Supervisors and employees need to be educated on what constitutes work hours and what they should be compensated for.

What we have learned in the last 30 days is that things don’t always happen as we expect them to.  The best thing you can do is make sure your policies are compliant with existing regulations.  You also should be prepared for any potential changes.  Use that as an opportunity to see what the right thing to do is for both your employees and the business.

 

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