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Nine to Five? The Uncertainty of Federal Overtime Regulations

On November 22, 2016, a federal judge in Texas granted a nationwide injunction to prevent implementation of new federal overtime regulations doubling the minimum salary of exempt employees.The ruling, which was issued only days before the rule was to become effective, has created uncertainty for many businesses.

First, it is important to note that this preliminary injunction is only a temporary hold on the overtime rule. The regulation may be implemented in the future, but given potential appeals by the Labor Department, as well as possible changes under the incoming Trump Administration, it is impossible to know when, if ever, the rule may become effective.

What should employers do in the meantime?  At least three general recommendations are in order:

  1. Continue to comply with the existing overtime regulations.  Because the new regulation is not in effect, employers are not required to pay overtime wages as provided under the new rule.

  2. Assume that the new regulation will be implemented in some form, and begin planning accordingly. For instance, our recommendation is that all employers keep detailed records of employees’ hours, whether those individuals work full-time, part-time, or volunteer. Likewise, it is a good time to update employee job descriptions, company policies, and employee handbooks to include specific procedures and guidelines for working overtime (even including such issues as smartphone usage).

  3. If a business has already advised employees about the salary increase or has actually implemented the increase to keep up with the new federal regulation, it may be best to uphold those changes. Although businesses are not required to do so, honoring such a commitment encourages a relationship of good will between employer and employee. In these cases, employers may wish to consider a written agreement in which the employer will pay overtime wages to those employees who would have been eligible under the new regulation for a limited time period in the discretion of the employer.

More suggestions are available at The Ohio Employer’s Law Blog or The Employer Law Report.

#contracts #regulatorylaw #smallbusiness #employmentlaw #administrativelaw

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