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Reacting to the Injunction on the U.S. Department of Labor’s Overtime Rule

Question – Though our Company learned of the U.S. District Court of Texas’ emergency injunction on November 22, 2016, we had already announced to the employees the changes that would be made in anticipation of the U.S. Department of Labor Overtime Rule’s December 1, 2016 implementation. What are our options now that the Rule is enjoined nationwide?

Answer – Many of this writer’s clients had fully prepared for the December 1, 2016 implementation of the U.S. Department of Labor’s new Overtime Rule, though fortunately the overwhelming majority had not yet announced any changes. If your Company has announced its plans to comply with the Rule, you now have the following options:

  • You can do nothing and leaving the changes in place.

  • You can undo the changes you have made, since the Rule is in all probability dead, and you will be under no legal obligation to follow it.

If you decide to undo the changes, consider how your employees will feel or react. This writer believes their reactions will depend on how they felt about the impending changes after they were first announced. If your employees felt demoted and demeaned by the changes, you may want to take advantage of the injunction and keep these employees overtime-exempt.

If you have already granted pay raises to certain employees to maintain their overtime-exempt status under the terms of the Final Rule, you have no obligation to keep them in place. However, you may face an employee relations nightmare if you roll them back.

The responsibility for this mess lies squarely with the U.S. Department of Labor for creating an Overtime Rule that more than doubled the salary threshold. This was administrative overreach at its worst. That is why the Court granted the injunction. The sad part is that Employers are now stuck figuring out how to undo the mess created by the Secretary of Labor.

Note: Nothing in this Legal Q&A should be relied upon as legal advice in any particular matter.

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