By Christine Thelen, Director of HR Services, Trupp HR.
With 10 days left before the December 1 implementation deadline, a federal judge unexpectedly placed a hold on the new overtime rule.
You’ve been granted a reprieve
A Texas federal court issued a temporary injunction delaying the implementation of the new FLSA regulations that raise the salary threshold for exempting employees from overtime. The temporary injunction means that employers across the country can continue to operate under the old rules until the court makes a final decision on whether the new regulations are allowable. The court could decide the regulations are valid and reinstate them at a later date. There is no rule on how long a court can take to make its decision, but before doing so, both sides of the case will need to be given time to present their arguments. This opens a window for the incoming administration to abandon the new regulations.
Don’t be too quick to change course
Despite the potential for the new overtime rules to be reversed, for companies that have already announced changes to salaries and FLSA classifications, it is generally recommended to continue on with transition efforts. For obvious reasons, it would be highly detrimental to roll back salary increases. Pulling back on reclassification of employees from exempt to non-exempt could be equally disruptive, depending on how your company carried out the reclassification. To make the change more palatable, many employers promoted the fact that employees could now earn overtime. Moving employees back to their previous salary, therefore, could be perceived as rolling back a pay increase. In addition, for some companies, the transition of employees to non-exempt was a significant change and great efforts are already underway to, among other things, adjust work scheduling methods and job descriptions to minimize overtime, and move employees toward tracking time and following non-exempt rules like taking breaks. Because the court could ultimately decide to uphold the regulation, it would be highly disruptive to tell these employees to go back to their old ways only to have to repeat the entire transition exercise at a later date, which could be just weeks or months later.
If you change course, do so carefully
There may be a few situations where employers might consider rolling back reclassifications, such as instances where reclassifications were not painted as opportunities to earn more money, and the switching back and forth related to time tracking would not be disruptive or would be less disruptive than having the reclassified employees track their time (this typically would be only when a handful of employees are effected). In these specific cases, employers might be able to reverse their recent efforts without jeopardizing the sense of stability, security, and validation that employees need and desire. If an employer is considering rolling back reclassifications, it is recommended that it be done very carefully and thoughtfully.