The Fair Labor Standards Act (FLSA) overtime rule determines whether employees are eligible for or exempt from overtime pay.
In 2016, changes were made to the overtime regulations of the Fair Labor Standards Act which were supposed to go into effect on December 1, 2016. The Fair Labor Standards Act (FLSA) overtime rule determines whether employees are eligible for or exempt from overtime pay. Exempt employees, because of their rate of pay and type of work that they do, are not eligible for overtime pay for hours worked over 40 in a workweek.
Eligible employees must be paid time and a half for any hours worked more than 40 in a workweek.
The 2016 FLSA Overtime Rule proposed the following:
- The rule extended overtime protections to 4.2 million workers who are not currently eligible under federal law.
- The annual salary threshold for exempt positions would have more than doubled from $23,660 to $47,476.
- Workers who did not earn at least $47,476 a year ($913 a week) would have to be paid overtime, even if they’re classified as a manager or professional.
- The Department of Labor would increase the salary threshold every three years. Based on current projections, the salary threshold is expected to rise to more than $51,000 with its first update on January 1, 2020.
- Employers would have been allowed to use non-discretionary bonuses to satisfy up to 10 percent of the general salary threshold, provided the incentives were made on a quarterly or more frequent basis.
- There would have been no change in the general duties test used to determine whether employees earning more than the salary threshold must be classified as nonexempt from overtime, including the exemptions for executive, administrative and professional positions, among others.
- For highly compensated employees (HCEs), who may be classified as exempt if they meet the criteria of a less-stringent duties test, the final rule would have raised the annual HCE salary threshold from $100,000 to $134,004.
On November 22, 2016, a Texas federal judge issued a preliminary nationwide injunction for all employers blocking the U.S. Department of Labor (DOL) from implementing the new exemption rule, also known as the FLSA overtime rule. On December 1, 2016, the Department of Justice, on behalf of the DOL, filed a notice with the U.S. Circuit Court of Appeals for the Fifth Circuit to appeal that preliminary injunction.
The Fifth Circuit issued an order granting the DOL an expedited appeal. Originally, opening briefs and corresponding responses were due by March 2, 2017. The attorneys for the DOL asked for a 60-day extension. That motion was granted, giving the DOL until May 1 to submit their response. On April 14, 2017, the Justice Department, on behalf of the DOL, asked for another extension until June 30. This extension was requested to allow time for a new labor secretary to be confirmed and finalize an approach to the litigation.
At this time, the rule’s implementation and enforcement are on hold.
It is unclear what the Department of Labor’s position is on the pending litigation. The DOL could decide not to defend the existing rule and opt to revise the rule or repeal it. For now, existing overtime rules remain in place. Employers have the option of continuing with planned increases to salaries or changes to non-exempt status, undo any changes made in preparation of the new rule and go back to following current overtime regulations and/or postpone any discussions on future changes until the law is settled.
If you are a business owner and confused about overtime laws, or think that you have not been receiving the overtime pay you deserve, contact Batson Nolan. We have a team of attorneys, skilled in business and corporate law who are ready to help. Contact our office to get started today. With hundreds of years of combined legal experience, we are committed to our clients and to achieving results that exceed expectations.