Judge Blocks DOL's Overtime Exemption Rules

NATIONWIDE INJUNCTION STALLS MASSIVE OVERTIME EXPANSION, OFFERS REPRIEVE FOR EMPLOYERS

On November 22, 2016, The United States District Court for the Eastern District of Texas issued a nationwide emergency injunction effectively preventing the United States Department of Labor (DOL) from enforcing its hotly contested overtime rule.

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Can Democrats Provide Some Runway for Employers on Overtime Rules?

We have all heard the hue and cry from many employers regarding the
impending change to the “white collar” exemptions to the FLSA’s overtime rules. As a reminder, the current minimum salary threshold is $455/week, or $23,660/year. The U.S. Department of Labor’s (DOL) final regulation imposes a new threshold that nearly doubles the minimum salary to $913/week (or $47,476/year) on December 1, 2016. The rule also includes automatic escalators every three years thereafter. Most would concede that the time had come for some upward adjustment to the minimum salary threshold. However, many employers, particularly non-profits and employers in retail, hospitality, and higher education, have complained that the December 1 salary threshold jump is too drastic and will cause hardships—often with unintended negative consequences for some overtime-eligible employees.

Employers have found a sympathetic ear from an unexpected quarter…House Democrats. In July, a group of four House Democrats, led by Rep. Kurt Schrader (D-Oregon), introduced the Overtime Reform and Enhancement Act (OREA).  http://schrader.house.gov/uploadedfiles/hr_5813_overtime_reform_and_enhancement_act_one_pager.pdf. The OREA legislation proposes an initial salary threshold increase to $692/week (or $35,984/year) on December 1, 2016, with the remainder phased in the increase over a three year period such that the $913/week threshold is effective on December 1, 2019. OREA would also eliminate the automatic escalators, on the novel (for Capital Hill) theory that everyone ought to see how the new overtime rule is actually working in the real world before the DOL simply raises the salary threshold “on autopilot.”

Dozens of organizations have spoken out in support of OREA, including the Society for Human Resource Management (SHRM), the National Restaurant Association, and the American Hotel & Lodging Association. Rep. Schrader’s office maintains a list of supporting organizations on its website, http://schrader.house.gov/overtime/.

It remains to be seen whether OREA can gain any traction in Congress. We are in an election cycle (in case you hadn’t noticed). How many other Democrats will be prepared to face the catcall that they are the enemy of hardworking families, in that they oppose overtime pay? Will reason and common sense prevail over rhetoric? Hey, in 2016…ANYTHING is possible!

In the meantime, the clock is ticking toward December 1. Employers should continue to prepare for the DOL regulation to go into effect as proposed.