New Overtime Rules Halted

November 23, 2016

New overtime regulations scheduled to go into effect December 1 were temporarily halted yesterday as a federal judge in Texas imposed a nationwide injunction.

The delay buys time for further legal consideration of the regulations, and court action could stretch beyond the January 20 inauguration of the Trump Administration. President-Elect Trump has been sharply critical of the new rules, and the Republican majority leadership in Congress has supported slowing their implementation. If court consideration extends beyond January 20, it is likely that Congress may act to undo the new rules, and the Trump Administration may drop defense of them in court.

According to 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."

Many orchestras and other nonprofit employers have already put employee compensation changes in place, with just eight days left before the new rules were to take effect. The Society for Human Resource Management points out that while employers are now permitted to maintain their current compliance with overtime rules, it may be difficult to back-track on upcoming salary adjustments that were already communicated to employees. Alfred Robinson Jr., an attorney with Ogletree Deakins in Washington, D.C. and a former acting administrator of the Department of Labor's Wage and Hour Division said, "Employers will likely want to leave decisions in place if they have already provided salary increases to employees in order to maintain their exempt status ...It would be difficult to take that back... If there are exempt employees who were going to be reclassified to nonexempt, but haven't been reclassified yet, employers may want to postpone those decisions and give the litigation a chance to play out."

The League will keep you posted as further information becomes available. In the meantime, this update from the National Council of Nonprofits may be helpful additional reading.