Client Alert: Federal Court Blocks New Overtime Rule
The United States District Court for the Eastern District of Texas issued a preliminary injunction blocking the US Department of Labor’s (DOL) overtime rule that was to take effect in less than a week. At the behest of 22 states and 55 business groups that brought suit as plaintiffs, the new rule would have doubled the minimum salary exempt employees from $455 per week ($23,660 annually) to $913 per week ($47,476 annually).
What does this mean for Illinois Employers? The impact of this decision means that employers do NOT need to go forward with plans to implement the new rule’s requirements in their workplaces-for the moment.
What should Employers do? As an initial matter, companies can now delay plans to implement salary increases for exempt employees. However, employers need to recognize that this is only a TEMPORARY injunction, which ultimately may be challenged by the Department of Labor. At the moment, the Court is considering a motion for summary judgment filed by the Plaintiff which would in effect make the injunction permanent. Because of the timing of the decision, it is likely that a new administration may take a different direction with the rule promulgated by the DOL.
What should I tell my Employees? Some companies and organizations may have already set forth a communication and employee relations strategy to comply with the rules. Indeed, some companies may have already provided increased salaries to comply. While you are able to essentially take back or not implement the new salary, be mindful that doing so will create potential employee relations issues. Be thoughtful in the approach you take and in how you communicate and implement any changes impacting employee salaries or expected raises.
Tristan & Cervantes has provided guidance to many businesses on proper wage and hour payment procedures and methods and has defended many businesses in lawsuits alleging improper payment. Please feel free to contact us with your questions and concerns via email at info@tristanlegal.com
