Federal Judge Blocks FLSA Overtime Rule from Taking Effect

A federal judge blocked the DOL's updated FLSA overtime rule from taking effect on December 1st. Learn how this may affect your company.

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Federal Judge Blocks FLSA Overtime Rule
from Taking Effect

21 States File Motion to Block FLSA Overtime Rule

In a surprise ruling, a federal judge blocked the Department of Labor’s (DOL’s) updated FLSA overtime rule from taking effect on December 1st. The ruling is in response to a November 16th hearing where 21 states argued that the DOL had exceeded its authority with the new $47,476 salary threshold.

Had the updated overtime rule taken effect on December 1st, it would have made an estimated four million workers eligible for overtime pay heading into the holiday season.

The court agreed with plaintiffs representing 21 different states that the rule could cause major harm if it wasn’t blocked from taking effect this week. Opponents argued that the rule would increase compliance costs for employers who would have to track hours more closely and would force companies to cut employees’ base pay to compensate for overtime costs.

What Happens Next?

The court will review everything pertaining to the proposed overtime rule and determine if the DOL did, in fact, exceed its authority with the proposed $47,476 threshold amount.

The DOL responded to the court’s ruling, stating: “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.”

What Does This Mean for Employers?

While the updated overtime rule is not taking effect on December 1st, this is just a stopgap. An official decision will need to be made by the court to determine what the final ruling will be.

In the meantime, employers should look at what state they are in and the status of its overtime rule plans to determine next steps.

Employers Who Already Notified Employees of Salary Increases

If you have already notified employees of salary increases, this can be a sticky situation. It may be too challenging to reverse the salary change or communicate that a change will not be happening after all. If you have not notified all of your employees or finished reclassifications, this is an opportunity to hold off on making any more changes until the final decision is made.

Employers Who Have Not Yet Notified Employees of Salary Increases

If you have not yet communicated salary changes to employees, you may be thinking it’s fine to ditch your plans to reclassify employees and increase salaries altogether. One course of action to consider is postponing your plans until a final decision has been reached by the courts.

No matter your situation, it is still important to have a plan of action just in case the updated overtime rule goes into effect after all.

How APS Can Help

The updated overtime rule gave a lot of employers a wake-up call in regards to their business processes, especially tracking employees’ time. Our Time & Attendance solution simplifies time and labor management to ensure your company is accurately tracking employee hours and maintaining compliance. APS’s unified database system can help you:

  • Manage employees’ schedules and accurately track time for controlled labor costs
  • Automatically track employees based on their classification
  • Ensure accurate payroll processing
  • Easily run reports for salary exempt versus salary non-exempt employees per pay period
  • Store important company and employee documents securely in our cloud-based solution