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Nov 23, 201602:10 PMLaw at Work

with Jessica M. Kramer and Ashlie B. Johnson

FLSA overtime and salary changes put on hold

(page 1 of 2)

This just in …

A federal court, on Nov. 22, 2016, issued an injunction to temporarily stop the Department of Labor from implementing the new rules which were set to change, among other things, the minimum salary that must be paid to exempt employees, which may impact an employee’s eligibility for overtime, from $23,660 to $47,476 per year, under the Fair Labor Standards Act (FLSA). The ruling comes after a number of states challenged the planned changes, arguing they are unlawful. However, this latest ruling applies to all states nationwide.

These new rules were set to go into effect Dec. 1, 2016; now the law will remain unchanged until further notice, as the case continues to make its way through the civil court process.

This halt is temporary. However, it could be many months (or longer) before it is known whether the rules will go into effect as originally written, whether a different set of new rules will go into effect, or whether the salary and overtime requirements of the FLSA will remain unchanged.

What do you do now?

Many employers have already made changes in anticipation of the new rules, and many more are prepared to make them Dec. 1.

  • If you’ve already implemented any compensation changes, stick with them.
  • If you’ve informed any employees of an upcoming compensation change, but do not plan to implement it until Dec. 1, continue with your planned change.
  • If you have made or planned to make classification changes (reclassifying a formerly exempt employee as non-exempt and now eligible for overtime pay — for example, someone that was paid a salary of $30,000 and was “exempt” and you planned to keep their pay the same but convert them to hourly and non-exempt), your options are more complicated, depending on the situation; you may benefit from a proper legal consultation on this issue.
  • While it is not illegal per se to reduce or otherwise change someone’s pay, reversing course on an employee who was expecting certain changes (whether the employee viewed the changes as good or bad) can bring you additional problems and possible repercussions.
  • If you had not yet made any changes or informed employees of any planned changes, but were planning to do so soon, you can wait it out if you’d like.

(Continued)

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About This Blog

Jessica M. Kramer is a partner at Kramer, Elkins & Watt LLC in Madison and writes about employment law. At KEW she handles employment law matters for businesses and individuals, and represents landlords in all aspects of landlord-tenant law. Jessica received her undergraduate degree from UW–Madison in 2000 and her Juris Doctor from the UW Law School in 2004.

 Ashlie B. Johnson, PHR, is the owner of Brooke Human Resource Solutions, serving the Dane County area. BrookeHR operates as an independent HR contracting resource for small businesses, providing a wide range of support as well as policy language, documentation, and employment agreements that meet today’s complex compliance standards. Ashlie received her B.S. in Human Resource Management from St. Cloud State University in 2002 and has been a certified PHR since 2007.

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