Sorry employers, the ride’s not over yet. For those of you keeping track, the U.S. Department of Labor’s new overtime exemption rules were set to go into effect yesterday, December 1, 2016. However, on November 22, 2016, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction blocking the rules from taking effect. It probably should not come as much of a surprise that the DOL is not simply rolling over on this issue. Yesterday, the DOL filed its official Notice of Appeal, taking the case up to the Fifth Circuit Court of Appeals. Our prediction meter is seriously out of calibration after the events of the last month, so we’re not going to attempt to handicap the DOL’s chances on appeal, at least not at this early stage. And let’s not forget, even if the DOL succeeds in its appeal, the forthcoming Trump administration and the Republican-controlled Congress may well take steps to block or change the rules once President Obama leaves office in January.
So, what should employers do now? For the time being, nothing really has changed. The injunction blocking the new rules remains in effect until the District Court or the Court of Appeals says otherwise. However, the injunction could be lifted at any time. If that happens, the rules will take effect. Arguably they will be effective retroactively to December 1, notwithstanding the injunction that is currently in place. This leaves employers who have exempt employees with salaries below $913 per week in an awkward spot. Those who have already implemented changes to comply with the new rules should strongly consider staying the current course at least until the dust settles and the litigation is resolved. Employers who have not implemented changes have to weigh the cost and of doing so now against the risk of having to retroactively pay overtime should the injunction be lifted, even if the result is only a temporary reprieve. At a minimum, employers may wish to minimize any overtime work by potentially affected employees and ensure that they are accurately tracking work hours.
We will report on further developments as they occur.