Late Tuesday afternoon, a federal district court judge in Texas granted a preliminary injunction to a number of plaintiffs who sued the United States Department of Labor, challenging the new overtime rules that were expected to take effect next Thursday, December 1.
The highly publicized rule would increase the salary threshold required for determining whether or not an individual is exempt from the Fair Labor Standards Act’s overtime rules. The new rule was applauded by the Obama administration and and workers’ rights groups, who cheered the fact that millions of workers would now be entitled to overtime compensation. The rules likewise was opposed by many business owners for the same reasons.
A number of states and private plaintiffs sued, claiming that the Department of Labor either had no authority to make salary a part of the exemption test or at least that the DOL exceeded whatever authority it did have. The court consolidated a number of the cases and recently considered a request to grant a preliminary injunction that would halt or delay the new rules until the court could consider the full merits of the case. The Court today granted the preliminary injunction, noting that delaying the implementation of the new rule while the case is pending would be wise, since it will be less disruptive than allowing the rule to go into effect and then potentially invalidating it after the fact.
The temporary delay places in jeopardy the final implementation of the rule, as it is expected that the final decision on the merits will not come until after January 20, 2017, when Donald Trump is sworn in as President. Some observers anticipate that President Trump and his new Labor Secretary will not defend the Obama Administration’s rule, allowing the overtime expansion to be invalidated.
We will continue to monitor this matter, but for now, it remains to be seen when, if or how these new overtime rules actually will take effect.
Tuesday morning, June 28, 2016, Attorney Aimee Willett addressed a packed room of business leaders at the Altoona Grand Hotel, to talk about what the new overtime regulations will mean for businesses. The new regulations will change the status of many employees as it pertains to exempt and non-exempt status, so the Legislative Action Committee of the Blair County Chamber of Commerce organized the seminar in order to help employers understand in greater detail just how they will need to comply and how they should prepare for the new rules to take effect later this year.
Aimee regularly practices in the area of labor and employment law and has represented employers in matters before state and federal trial and appellate courts in Pennsylvania, arbitrations, local agency hearings and other administrative proceedings before the Pennsylvania Human Relations Commission, Equal Employment Opportunity Commission, and Pennsylvania Labor Relations Board.
Last year, the US Department of Labor published a proposed rule expanding overtime entitlement for millions of workers. The Department received a significant number of comments since then, both in favor of and opposed to the proposed rule, and today the Obama administration announced a final version of the overtime exemption rule.
The rule, which will go into effect December 1, 2016, will expand the class of people who will be eligible for overtime compensation. The Fair Labor Standards Act currently requires employers to pay employees one and one half times their regular rate for all hours worked in excess of 40 hours in a workweek. Some employees, however, are exempt from this requirement if they meet certain criteria. Specifically, in order to be exempt the employee must perform certain types of duties and must be paid a certain minimum salary. It is that minimum salary threshold that is altered by the new rule.
Under the current rule, in place since 2004, that minimum threshold has been $455 per week, or $23,660, per year. The new rule would double that, to $47,476, per year.
If an employer has any employee that currently is exempt, but who is paid less than $47,476, then starting December 1, the employer has several options if he or she wishes to maintain the exemption and avoid paying the overtime premium. For example, the employer can increase the employee’s salary to some amount above that threshold, to maintain the exemption. Of course, that is most feasible for those exempt employees who already are paid some amount close to that threshold.
What is more likely, however, is that many employers will reduce the number of hours worked, to limit the likelihood of overtime compensation. Alternatively, some employers may reduce the base pay for some employees, so that the same total compensation is paid after accounting for the new premium pay.
The new rule requires perhaps the most significant change in overtime rules in more than a decade, and employers now have about six months to plan and prepare.
If some Pennsylvania state lawmakers have their way, teacher layoffs soon can be based on performance rather than just seniority. Although the idea is not new, the proposal once again has been made to amend the PA School Code to eliminate the longstanding requirement that when schools lay off teachers they eliminate the positions of the least senior employees.
The proposals, found in Senate Bill 5 and House Bill 805, would permit districts that need to lay off teachers to select the worst performing teachers instead of the least senior, using annual performance ratings as the guide. According to reports the bills’ sponsors say that it too often is the case that good teachers are let go while poorer performing teachers are kept, and they note that Pennsylvania is one of only six states that still requires these decisions to be made on the basis of seniority only.
Again, the proposal is not new, but the bills do have bi-partisan support. They have been referred to the respective Education Committees in each chamber, and we will continue to monitor their progress.