For the last year and a half, the HR space has been saturated with news about the Department of Labor’s (DOL) new overtime rules. The rules were set to expand overtime pay to over 4 million US workers and were slated to go into effect December 1, 2016.
Still, not everyone was on board. In fact, the rules were so controversial, that the US Chamber of Commerce, along with 21 state governments, filed a lawsuit against the DOL citing that the new rules would “unfairly and substantially increase their employment costs[1].”
With the lawsuit set to extend beyond the December 1st effective date, a federal judge issued a preliminary injunction—blocking the new overtime rules from taking effect.
DOL Asks for Expedited Appeal
In response to the injunction, the DOL appealed the decision, and a day later, filed a motion seeking an expedited briefing schedule on its appeal.
With a new president taking office January 20th, it is hard to determine the future of the overtime rules—even if the court approves an expedited briefing schedule. It’s likely that the Trump administration will make it difficult for the appeal to proceed, preventing the new rule from going into effect.
How Businesses Are Reacting to the Overtime Rule Injunction
Businesses are reacting to this news in a few different ways, but determining how to proceed comes down to how much your business planned to comply with the new overtime rules. If you made changes or communicated changes before the December 1st deadline, next steps could get tricky[2].
- Some employers have completely halted their initial plans by rescinding raises and stopping any job re-classifications from going into effect.
- For purposes of employee-morale and other reasons, some employers have decided to move forward as if the rules took effect. In other words, all raises and re-classifications took place. In fact, one study found that 84% of small businesses still planned to implement their overtime changes[3].
- Other employers have taken a hybrid approach to the news, and have re-classified some employees based on their duties but not on their salary alone.
How Employers Should Move Forward
While we wait for a final decision to be made, there are actions employers can take to stay one step ahead. At the end of the day, compliance should be the number one focus.
- Consider all options: determine the different ways you can proceed and be sure to address all sides that will be impacted by that decision: employees, managers, customers etc.
- Assess the costs: consider the costs of raises and re-classification, but also the damage to employee morale or potential litigation.
- Keep accurate records: wage and hour data has never been more important, and unified payroll and time & attendance technology help you track employee hours and view compensation to help make informed decisions about next steps.
- Be transparent: inform all employees/stakeholders of the situation and be ready to notify them if any changes occur.
At the end of the day, the fate of the overtime rules is in limbo. But it’s safe to say all employers should stay informed and pay attention to what happens in the next few weeks. EPAY will be following the decision closely, so stay tuned.
EPAY Human Capital Management can help limit your overtime costs, while maintaining productivity and labor compliance, even in the face of the pending overtime rules. Contact us to learn more.
Resources
[1] http://www.wagehourinsights.com/2016/09/21-states-file-suit-challenging-the-dols-new-overtime-rule/
[2] http://www.seyfarth.com/dir_docs/publications/DOLFLSARulesWebinar_112916.pdf
[3] http://www.manta.com/resources/small-business-trends/new-overtime-rule-put-hold-mean-small-employers/
