Back in May 2016, President Obama and U.S. Secretary of Labor Thomas Perez announced a final rule update to the Fair Labor Standards Act (FLSA). The update, frequently referred to as the “white-collar overtime provision,” was designed to extend overtime pay protections to more than 4 million workers across the country.
A lot has happened since then.
Lawsuits Stall FLSA Rule Implementation
While the rule was targeted to take effect December 1, 2016, a consortium of 21 states filed a joint lawsuit to prevent this change from occurring. And on October 21, the states submitted an emergency motion asking that the rollout of these new guidelines be delayed until the suit had run its course.
A little over a week later on October 21, 2016, Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texasgranted a request from the U.S. Chamber of Commerce and over 50 other business groups to combine their separate case with that of the states into a single suit.
Would you like to better informed on what the proposed changes entail? Read: FLSA Overtime Changes: What Do Employers Need to Know?
Weeks later on November 22, 2016, Judge Mazzant ruled on the emergency motion and issued a nationwide injunction that delayed the implementation of the new overtime rule until the existing challenges were resolved.
Outlined in a 20 page decision, the judge found that the backers of the lawsuit against the new rule had a reasonable chance of winning their challenge and would experience severe financial harm if the rule went into effect on the planned date. The judge further determined it likely that the Obama administration had overstepped its authority with the new requirements.
On December 1 — the day originally planned for the new rule to take effect — the Department of Labor (DOL) appealed the injunction with the Fifth Circuit Court of Appeals.
As it currently stands, there is no planned implementation date for the new FLSA overtime guidelines. But that fact can change quickly.
What Can You Expect from 2017?
Put simply, no one knows.
It seems unlikely that the Fifth Circuit will issue a ruling before the inauguration of President-Elect Donald Trump, meaning that any potential changes will occur under the oversight of the Trump administration.
And in an interview from August 2016, Mr. Trump stated, when asked about the new overtime regulations, that he “would love to see a delay or a carve-out of sorts for our small business owners.”
A number of possibilities now exist. The Trump administration may choose to withdraw the appeal, or seek an alternate avenue to alter its guidelines. The newly appointed Congress may take measures that would override the federal guidelines. Or the DOL could file a motion to stay the injunction, which if granted, would place the new rule in effect while the larger challenge is argued in the courts.
What Can You Actually Do to Prepare?
Monitor the News
Any decision either by the DOL or the Fifth Circuit will be considered newsworthy and widely reported. You can monitor human resources-specific news sites, such as the Society for Human Resource Management. Forbes has kept a close eye on the situation as well. And the DOL will certainly issue a press release no matter any decision.
Have a Plan
Considering that the injunction was issued only days before the new rule was planned to take effect, your business likely already had a plan in place to handle the updated rules. If not, it would be a wise decision to draft one. The amount of time and energy invested will likely be cheaper than any penalties your business may incur if the rule quickly goes into effect.
The Next Step
No matter what 2017 brings for the new FLSA overtime regulations, your business will need to support supervisors and managers as they work to accommodate any changes. Corporate-driven policies and well-documented guidelines will help to keep everyone on the same page.
For best results, you should supplement these efforts with wage and hour law training courses. Ideally, any training you provide should include:
- A review of federal and state laws including recent changes
- How to properly classify employees
- Ways to address off the clock work
- Strategies for accurately tracking time worked
- How to handle complaints
If you’d like to learn more about our wage and hour law training courses, fill out the form on the right to schedule a demo.