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Federal Judge Blocks FLSA Overtime Rule Implementation

by Tom Bolt on December 21, 2016

Over the past year, business owners across the United States have been trying to prepare for December 1, when new Fair Labor Standards Act (FLSA) overtime rule changes were set to go into effect.

However, in late November, Judge Amos Mazzant of the U.S. District Court issued a ruling blocking the implementation of the rule, primarily due to the way it treated white-collar exemptions within the law as it was originally written. According to the court, Congress intended these white-collar exemptions to turn on an employee’s performance and conduct on the job—and not his or her salary. The judge’s ruling essentially states that by doubling the salary threshold for guaranteed overtime pay, the U.S. Department of Labor operated outside its jurisdiction.

It is important to note that this injunction is not permanent and is only meant to delay the rule until the courts can make a “merits determination.” While a permanent injunction is anything but a given at this point, the fact that a federal judge even implemented a preliminary injunction indicates there’s at least a chance the rule could be overturned.

With a change of administration coming to Washington, D.C., this also means President-Elect Donald Trump and his Secretary of Labor will have a lot of say as to whether the Department of Labor will continue to pursue the new overtime regulations under the FLSA.

What impact will this injunction have on businesses?

Small businesses across the country widely supported the ruling by the federal judge, as did the National Association for the Self-Employed. Many believe that had the DOL succeeded in implementing the change, there would have negatively impacted small businesses. Employers suddenly would have been forced to eliminate positions, cut back hours or change salaried workers to hourly.

Some small business owners had asked for specific exemptions to be put into place for smaller organizations so they would better be able to adjust to the changes. Many businesses had not yet shared any information about these rule changes to their employees, which would have meant a large number of workers would have been suddenly surprised by a change in their payment had they not been following along.

One study by ComplyRight revealed that out of nearly 800 owners of very small businesses (under 20 salaried employees) polled, about 82 percent had not shared information with employees regarding the new law. This would suggest employers either did not know how they were going to make the changes within their business or were altogether unaware the changes were coming.

It will be important for businesses owners in the U.S. Virgin Islands and beyond to stay up to date on this issue as it develops. If you have any questions about how the potential overtime rule change could impact your company, meet with a knowledgeable employment law attorney.

Ravinder S. Nagi is Assistant Managing Attorney and Chair of the Litigation Practice Group at BoltNagi, an established and well-respected civil litigation law firm serving individuals, businesses and organizations throughout the U.S. Virgin Islands.

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