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Judge Halts Implementation of FLSA Overtime Rule

A federal judge has granted a preliminary injunction that will temporarily block implementation of the FLSA overtime rule. A lawsuit challenging the overtime rule was filed by 21 states and a variety of employer groups. In granting the temporary injunction, U.S. District Court Judge Amos Mazzant, an Obama appointee, stated that the overtime rule would have caused irreparable harm if it went into effect. It is noted that the injunction is temporary and a ruling on the final merits will need to occur before a final ruling is put in place. President Elect Trump has indicated that he wished to see an exemption in the rule for small businesses and non-profits; however, it is not clear how the new administration will address this matter.

What does this mean for employers now? Many employers have already provided or otherwise stated that select employees will be receiving salary increases to meet the exemption’s $47,476 annual threshold, while others have readjusted schedules and modified positions to avoid a dramatic increase in overtime. For the moment the changes to the FLSA do not go into effect and that means that the salary basis remains at $23,600 annually or $455 per week. Thus, positions whose salary did not meet the increased salary basis may remain exempt. It is generally thought that most employees preferred the flexibility that came with the salaried exemption. As to those employees who were promised a salary increase as of December 1, in most cases employers are not legally obligated to follow through with the increase. However, employers should consider how a revocation of a pay increase may impact employee morale and loyalty.

As a great deal of uncertainty remains, employers having specific questions should consult with their legal counsel.

DISCLAIMER: The foregoing does not constitute legal advice and has been prepared for informational purposes only.  Please contact us to determine how the FLSA overtime rule applies to your specific organization and its employees.

Prepared by GKH attorney Jeff Worley. Attorney Worley practices in the areas of employment law, corporate and commercial law, and general litigation.