The Department of Labor’s (DOL) new overtime exemption rule was scheduled to go into effect Thursday, December 1st but a federal district court in Texas has issued a temporary injunction.

So what does that mean for small business owners and their employees?

“In summary, the court’s order blocks the new rule from taking effect this week (absent an emergency appeal) and applies to all public and private employers nationwide.” The DOL can still seek to have the injunction vacated or appeal it in the US Courts of Appeal for the Fifth Court.

With the injunction in effect, employers are not required to obey the DOL’s overtime rule but there are risks if employers choose not to. If the injunction is later vacated by the court, employers will be forced to make retroactive payments if they did not comply with the rule beginning December 1st. This only leaves employees and employers uncertain. The National Law Review provided some insight into what employers should consider if they do choose to follow the new overtime rule or if they do not. ·

  1. Consider what has been said to employees about reclassification and eligibility for overtime. Do the communications create a potential employee relations problem or—worse—a potential legal problem? Decide how any new communications will address these issues and whether the original exempt classification was defensible. ·
  2. What is the cost of undoing the changes already made to employer payroll processes and systems? Can those changes be put into place again quickly if the new rule is ultimately implemented, and especially if it is implemented retroactively? If a stop and wait approach is taken, does it make sense to still track hours for those employees who would be non-exempt under the new rule, in the event the rule is applied retroactively?

-Ray Hayes


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