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Judge Issues Injunction Against the New Overtime Rule

The new overtime rule employers have begrudgingly prepared for and employees have eagerly awaited over the last several months received a nationwide injunction by a Texas judge, Tuesday.

This news comes only 10 days before the DOL’s new rule was scheduled to go into effect and after many businesses had already started preparing for it.

The rule was challenged by 21 states and over 50 business groups and, while a federal judge in Texas reviews the potential impact of president Obama’s overtime rule, the deadline is on hold. With the Trump administration taking over the DOL in January and a republican held congress, it’s conceivable that rule will undergo some changes, but what those might be is anyone’s guess.

For now, businesses are advised to continue to make plans, assuming some kind of change to the overtime threshold will take place.

What Should Businesses Do?

If employers have already started migrating employees from salary to hourly, they should probably hold tight for a final answer, rather than back out of the process entirely. It is a lot of work to get employees switched over to hourly and train employees on hourly laws. If the overtime threshold gets lowered, this process will continue for millions of employees. And currently, we have no way of knowing what the threshold might get lowered to, if it will get cancelled, or if it will simply pass as is.

Get Those Misclassified Employees Reclassified Now!

Employees that were misclassified to begin with, such as inside sales reps and some administrative workers, could be reclassified from salary to hourly with less risk of being noticed. Usually, the DOL takes note when employers switch employees to hourly – it’s a red flag that something was amiss – but with so many employees being reclassified throughout November, it’s likely they won’t be investigating all of the cases that were only occurring as employers scrambled to follow the new rule.

The DOL investigates and punishes employers when they find out employees were misclassified. Right now may be a good time to fix any missclassification issues, without getting caught.

If you have “administrative” workers, read up on the DOL’s statement about the difference between an exempt administrative worker and a non-exempt one:

“The most elusive and imprecise of the definitions of exempt job duties is for exempt “administrative” job duties.

The administrative exemption is designed for relatively high-level employees whose main job is to “keep the business running.”

Merely clerical work may be administrative, but it is not exempt. Most secretaries, for example, may accurately be said to be performing administrative work, but their jobs are not usually exempt. Similarly, filing, filling out forms and preparing routine reports, answering telephones, making travel arrangements, working on customer “help desks,” and similar jobs are not likely to be high-level enough to be administratively exempt. Many clerical workers do in fact exercise some discretion and judgment in their jobs. However, to “count” the exercise of judgment and discretion must be about matters of considerable importance to the operation of the enterprise as a whole.”

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