on November 02, 2016 Payroll

FLSA Overtime: A Sigh of Relief for Employers?

A couple of weeks ago, two lawsuits were filed in federal court in Texas seeking to block the Final Rule on white-collar exemptions to the overtime provisions of the Fair Labor Standards Act, which was issued in May. Meanwhile, legislation that would delay the effective date of the rule until June 2017 just passed the U.S. House of Representatives, and there is other legislation pending in Congress that would “nullify the rule.” The overtime rule is still set to take effect on December 1, but with all of this “blockage action” going on, can employers breathe easier now? Let's find out.

A dark portrayal of the capitol in washington D.C.

Two representatives from Constancy's Wage and Hour Practice Group were interviewed about all legal action being taken, and to give the general population insight into these rules.

The rest of this post is a summary of all legal actions on relation to this new rule.

Two lawsuits were filed in the same time in a federal court in Texas last week and are jmounted by the US chamber of Commerce and other smaller organizations. Because the two are mounted at the same time, there's a good chance that it is a coordinated effort between many parties. This same court was successful at Blocking the Secretary of Labor from enforcing the Persuader Rule. 

According to Ellen Kearns, this district has a repitation of moving cases quickly, meaning that legal issues could quickly get moved up to the supreme court. 

The main concern of the new FLSA rule is that local and state governments will have to change how they budget and move money around. Many officials are worried that they may have to lay off employees and get rid of state-run programs.

Other plaintiffs in the case say that the Department of Labor arbitrarily doubled the minimum threshold for exempt employees from $23,660 to $47,676. The Department of Labor counters that they set the threshold too low to begin with to keep up with the economy.

Jim Coleman with Constancy's Wage and Hour Practice Group says that employers should "have contingency plans in place so that they can be in compliance if the judicial or legislative fixes do not come to pass." All of the legislative fixes need approval from the White House or majorities in house and senate to override a presidential veto. The case only has 2 months to appeal all the way up to the Supreme Court. 

So the answer to the question of "can employers relax and be sure that the new FLSA will be blocked" is pretty up in the air. 

With a 2 month time crunch and many similar cases trying to do the same thing, the answer is "maybe, but pretty unlikely".

Paul Hardin

Paul Hardin is President of Moulton & Hardin, Inc. As an expert in both Employee Benefits and Workforce Management, Paul studies the relationship between all aspects of Human Capital Management, with an emphasis on Benefits Management, ACA, and how an HCM platform is invaluable for employers.

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