Do You Need to Make Changes To Your Company Overtime Structure?

Many companies and organizations were planning for changes or had already begun to make changes to their workforce management systems and accounts to comply with the Obama Administration’s overtime pay rule, which was supposed to go into effect on December 1st. Now companies are left to either hurry and revert all the work they’ve already completed, or accept the changes they already made to their workforce infrastructure, and continue as if the rule was not blocked on November 22nd.

Due to the nationwide injunction by U.S. District Judge Amos Mazzant III, companies can continue to operate under the current standard, and don’t have to make any changes for now. However, this doesn’t mean that modifications to the overtime pay rule won’t occur in the future. The revised law was supposed to impact salaried employees who earned less than $47,476 a year who worked more than 40 hours in a given week. Those employees qualifying under this rule would have to be paid time and a half for extra hours above 40. The Fair Labor Standards Act’s (FLSA) salary threshold for exempt employees will remain at $23,660.

In response to the blocking of the new overtime rule, the Department of Labor made a statement in which they claim they are considering all of their legal options because they are confident in the legality of the new overtime rule. Their statement seems to imply they will try to continue to work towards enacting the new overtime salary threshold.

There are two sides of this argument. The first demonstrates improved wages for salaried workers that currently do not get compensated for additional hours over 40 a week who earn $23,660 or less annually. Supporters say that the FLSA overtime salary threshold has not compensated for inflation. While dissenters site difficulties in workplace flexibility, and claim that businesses will be required to pay millions in additional salaries. The original complaint was brought to the court by 21 states with a second case filed by business groups including the U.S. Chamber of Commerce.

One thing is for sure, companies are left to wait in limbo while the court determines whether the Labor Department has the authority to enact the overtime rule. In the meantime, it is advantageous to stay abreast of the overtime rule proceedings, and have a plan in place should the new salary threshold be upheld.