Last week, a Federal district court judge in Texas ordered a preliminary injunction against the Department of Labor's Overtime Reform set to take effect on December 1, 2016. For many of you, this is the Christmas/Holiday miracle you were waiting for. For others, it's a reminder that overtime reform remains a controversial topic and is still not a sure thing. Here is some key information you should know (and some thoughts for the future).
So I did all that Overtime Reform planning for nothing?!
Maybe, maybe not. The federal case that led to this preliminary injunction was initiated by various states challenging the Department of Labor's authority to initiate unilateral reform. This is complicated legal stuff that will probably go through various appeals before a final decision is ordered. In the meantime, the preliminary injunction preserves the status quo - meaning the current overtime laws remain in place until this lawsuit is played out. This also means that December 1, 2016 deadline is meaningless for the time being.
Remind me about the current Overtime laws, please.
Overtime is due to every non-exempt employee who works more than 40 hours in a workweek. In order to be exempt from overtime (meaning that employee does not get overtime regardless of how many hours worked), the employee must meet the salary threshold and an exemption description/category. The current law states that the salary threshold is $455 per week or $23,600 per year. As to the exemption categories, we talked about some of there key ones in this blog post. If the employee does not meet both the salary threshold and the exemption description/category, he or she is non-exempt and owed overtime if they work more than 40 hours in a workweek.
^^ This will be the law you follow until the preliminary injunction expires and/or an alternative body of reform is initiated.
What do I do while I wait?
Here's the deal: regardless of what happens with this federal lawsuit, there is a strong likelihood overtime gets reformed. It has been a pretty universal concept that overtime is in need of a makeover since it hasn't been updated in over a decade and the salary threshold no longer makes sense considering the purpose of overtime. (Read more about the pros and cons of overtime reform here). That said, I would continue to operate under the assumption that sometime (maybe soon) the salary threshold will increase. Will it continue to be the 100%+ increase we saw earlier this year? We simply do not know. However, it can never hurt to be ahead of the curve and to start prepping for these changes by formulating a business plan to accommodate an increase in overtime recipients.
To be continued....