New federal overtime rules that were supposed to go into effect on December 1, 2016, have been put on hold. In November a federal judge in US District Court for the Eastern District of Texas issued a preliminary injunction against the new rule which would have doubled the Fair Labor Standard Act (FLSA) salary threshold for the exemption from overtime pay.
In October 2016, more than 20 states filed a motion for the injunction claiming the US Department of Labor (DOL) went beyond its authority by raising the salary threshold too high and including automatic increases in future years. The US Chamber of Commerce filed a lawsuit, which included other business groups raising similar objections to the new rule.
According to Judge Amos Mazzant in his November 22 ruling, there will be no changes to the federal overtime rule until “the court determines the department’s authority to make the final rule as well as the final rule’s validity.”
The FLSA is the law that governs the federal minimum wage and overtime. The FLSA states that for every hour a person works, he or she must receive at least the minimum hourly wage. It also says that when a person works more than 40 hours in a workweek, he or she must be given their regular hourly rate plus half – known as time-and-a-half or overtime pay – for the extra hours.
There are workers who are exempt from overtime under the FLSA. Exemptions involve a salary threshold that works in tandem with a duties test. Currently, the salary threshold is $455.00 per week or $23,660 per year. An employee who earns at least this amount whose job duties are primarily executive, administrative or professional is not entitled to receive overtime pay.
The new rule that was supposed to take effect December 1 increases the salary threshold to $913.00 per week or $47,476 per year and would presumably entitle millions of workers to overtime wages currently unavailable to them under the existing limit.
The DOL has stated that it “strongly disagrees with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans.” A spokesperson for the DOL stated that they are also “currently reviewing all of our legal options.” There has been no adjustment to the FLSA overtime salary threshold in 12 years.
How does the court ruling affect employees and their employers? In preparation for the new rule, many businesses have already begun the process of giving raises to employees to maintain their exempt status or paying overtime to those who were otherwise ineligible. Many have implemented new hour tracking programs and made other changes in anticipation of the December 1 start date.
Several businesses intend to continue moving forward with their plans, making salary and hour adjustments as they would have had the new rule gone into effect. A representative of One-Off Hospitality told the Chicago Tribune “We would not think for a moment to go back on our word.”
Many states also have minimum wage and overtime laws that must at the very least, satisfy the requirements of the FLSA. The amount of the state minimum wage may meet or exceed the national one, and the higher pay rate prevails. The same goes for overtime rules. States can enact laws that provide overtime hours and wages for more workers but not fewer workers than allowed by the FLSA.
On October 16, 2016, the New York State Department of Labor issued proposed amendments to the overtime rules that would increase the salary threshold for executive and administrative employees. The proposed changes vary depending on the region or county of New York that you work in and the size of your employer. For example, the proposed salary threshold increase for a large employer in New York City is greater than the proposed increase for a business located on Long Island or in Westchester.
If and when the state finalizes and approves these rules, New York employers will have to make adjustments accordingly. The federal injunction against the FLSA changes does not affect the provisions that may go into effect in New York State.
To learn more about overtime rules and whether or not you are receiving the proper wages for the time you put in at your job, contact Leeds Brown Law, P.C. Our employment attorneys have decades of experience handling unpaid overtime and other wage claims for hard working people on Long Island and across the country.
Overtime rules can be complicated, especially when they are changing and employees must understand their rights to protect them. Call Leeds Brown at 1-800-585-4658 if you think you have an unpaid wage claim against your employer.