November 23, 2016- Compliance Observer Alert- Overtime Rule Halted

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November 23, 2016


A federal judge has halted the new FLSA overtime rule just days away from its effective date of December 1, 2016


In May 2016, the Department of Labor (DOL) issued its final Fair Labor Standards Act (FLSA) overtime rule which was scheduled to take effect December 1, 2016. Among other changes, the new rule would have raised the salary threshold for executive, administrative and professional overtime exemptions from $23,660 to $47,476. The threshold would then automatically increase every three years, with the first automatic update taking place on January 1, 2020.

On October 14, twenty-one states, led by Nevada and Texas, filed an emergency motion for a preliminary injunction asking the court to block enforcement of the new rule pending a final ruling on the states’ claims that the DOL had exceeded its authority by raising the salary threshold and by providing automatic adjustments to the threshold every three years. On the same day the U.S. Chamber of Commerce and several other business groups, which had also filed a lawsuit challenging the new rule, asked that the court consolidate their case with the state lawsuit.

Until yesterday, it appeared that employers were going to need to comply with the new overtime rule by December 1. In a ruling handed down by Judge Amos Mazzant, of the U.S. District Court for the Eastern District of Texas, “A preliminary injunction preserves the status quo while the court determines the department’s authority to make the final rule as well as the final rule’s validity.”


The overtime rule will not take effect as planned on December 1; however, it could still be implemented at a later date.  For now, employers may continue to follow the existing overtime regulations, last updated in 2004, until a decision is reached but should continue to plan for future implementation.


Please contact your AssuredPartners Benefits Team if you have questions or need assistance with this topic or other compliance matters


Information contained herein is for educational and/or informational purposes only.   The information provided may change over time as the laws and regulations change. This information is not, nor is it intended to be, legal advice and each employer or client should seek their own legal counsel for guidance regarding individual situations.

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