Legal Alert Court Blocks Overtime Rule

Authored By THEODORE T. STORER

TEXAS CASE ENJOINS THE PROPOSED SALARY INCREASE

A Texas federal court issued an order on November 22, 2016 that stops regulations changing the definition of employees who are eligible for overtime pay.  The United States Department of Labor issued a rule increasing the minimum salary level for exempt employees.  The court order creates a nationwide injunction against the increased salary requirement that impacts almost all employers: public, private and not-for-profit.

Employees who earn at least $455 per week, and who meet other job description criteria, will remain exempt from overtime pay.

For most employers, the proposed rule that was to take effect on December 1 meant that payroll starting on November 28, encompassed either a raise in pay or making sure employees knew how to track the hours worked to see if they worked more than 40 hours in a week and were eligible for overtime pay.  Employers are now free to keep their same payroll processes.

If an employer implemented a new process, salary change or pay change, the employer can either: (1) keep the changes; or (2) inform employees that any change in process, status and pay is not going to occur until the courts and the federal government review the laws and issue guidance to employers.

Your Rothberg lawyers will continue to monitor this case and the regulations to provide further guidance.


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