HR Professionals Magazine -December 2016

December 2016 Issue Highlights

In the Spotlight: Bruce and Blair Johanson, Arkansas Compensation Gurus




breaking news

Breaking News – FLSA Overtime Rule Blocked

(Nov. 22, Texas) A federal judge in Texas has put the brakes on the Department of Labor’s new federal overtime rule, just 10 days before the effective date of December 1. The new regulation would have doubled the Fair Labor Standards Act’s salary threshold for exemption from overtime pay. It would have increased the salary threshold from $23,660 to $47,476. In addition, it provided for adjustments based on the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census region every three years.

Twenty-one states filed an emergency motion for a preliminary injunction in October to halt the rule. They claimed that the DOL exceeded its authority by raising the salary threshold too high and by providing for automatic adjustments to the threshold every three years. These cases were consolidated in October with another lawsuit filed by the U.S. Chamber of Commerce and other business groups that also objected to the rule.

Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas said, “A preliminary injunction preserves the status quo while the court determines the department’s authority to make the final rule as well as the final rule’s validity.” For now, the overtime rule will not take effect as planned Dec. 1, but it could still be implemented later down the road as a preliminary injunction isn’t permanent. It preserves the existing overtime rule last updated in 2004 until the court has a chance to review the case and the objections to the revisions to the regulation.

Judge Mazzant noted that the DOL “has admitted that it cannot create an evaluation ‘based on salary alone. However, “this significant increase to the salary level creates essentially a de facto salary-only test,” he said. “If Congress intended the salary requirement to supplant the duties test, then Congress—and not the department—should make that change.”

The DOL released a statement advising, “We strongly disagree with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans. The department’s overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options.”

Although some employers have already increased some salaries, if there are exempt employees who were going to be reclassified to nonexempt, but haven’t yet been reclassified, you may postpone those decisions and see what happens down the road.



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