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New Overtime Rules Suspended For Now
New Overtime Rules Suspended For Now
New Overtime Rules Suspended For Now
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Phone: 281.880.6525
New Overtime
Rules Suspended
for Now
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Many employers have been wrestling with plans to comply with new U.S.
Department of Labor (DOL) overtime rules since last May. That's when the
rules were finalized, with a December 1 compliance deadline. Those new rules
included raising the minimum salary overtime exemption to $913 per week
from $455. A little more than a week before the deadline for the rules was to
take effect, a federal court has issued an injunction, at least temporarily
blocking implementation of the changes.
In its decision, the court stated it believes the DOL exceeded its authority in
promulgating the rule. In addition, the court said the DOL failed to follow
Congress's intent, which was to reexamine the duties test of the overtime
rules, and not to focus solely on the salary level, as the final rules do.
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Disruption Issue
The benefits of a wait-and-see approach are that there's no disruption to the
status quo and, in most cases, there will be no spike in payroll costs. However,
that approach may also bring risks, including having to scramble to make
adjustments if the regulations ultimately are upheld. That scrambling might
involve paying extra wages due to affected employees retroactive to
December 1.
Another hazard is that employees who have kept abreast of the issue
(independently of any statements made by their employers) who
were expecting raises or eligibility for overtime pay could be angered that this
benefit was snatched away from them.
Employers faced with this dilemma will need to weigh their appetite for
regulatory risk, the level of financial pain that compliance with the overtime
regulations would inflict, and the employee relations considerations.
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Morale Considerations
If salaried employees had been promised raises to bring them up to the
minimum salary threshold (in lieu of moving them to hourly status), dropping
plans for those raises could give rise to problems, such as damaged employee
morale. Legal issues could also arise, especially if the promised raises have
already been granted. For example, employers could run afoul of notice
requirements under state or local laws, and possibly violate common law
doctrines governing implied contracts.
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How the issue will ultimately shake out is uncertain, at best. But observers in
Washington, D.C., point out that although many members of Congress
opposed the regulations as written, they agreed in principle that some
increase in the overtime salary threshold was in order. That is, they didn't
reject the DOL's legal authority to adjust the threshold, as it has done multiple
times since the early days of the underlying statute.
Whatever actions, or non-actions employers take with regard to the rule, it's
essential to communicate as clearly as possible with employees about the
issue. One basic message that would be reasonable would be for employers to
explain that they are waiting for more clarity on the legal front before making
any big decisions.
Employment attorneys are monitoring the issue carefully, and are an essential
resource to take advantage of before taking any irreversible action.
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E-mail : info@hrp.net
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