The New FLSA Overtime Rule – Challenges Abound

The new FLSA Overtime Rule is scheduled to go into effect on December 1st. This rule, as most employers likely already know, increases the FLSA’s minimum annual salary requirements for exempt employees to $47,476 per year ($913 per week).

In the face of this rapidly approaching deadline, there have been recent efforts to delay, if not entirely prevent, the new overtime regulations from going into effect. While this article will (briefly) discuss these challenges, it remains our recommendation that all employers continue to plan for and implement any necessary changes to ensure compliance with the new FLSA Overtime Rule come December 1st.

What are the challenges?

On September 20, 2016, two separate lawsuits were filed in federal court (the Eastern District of Texas) seeking an injunction to stop the new overtime regulations from going into effect. The first lawsuit was filed by the U.S. Chamber of Commerce in conjunction with a number of other business groups. The second lawsuit was filed by a coalition of 21 states (Nevada, Texas, Alabama, Arizona, Arkansas, Georgia, Indiana, Kansas, Louisiana, Nebraska, Ohio, Oklahoma, South Carolina, Utah, Wisconsin, Kentucky, Iowa, Maine, New Mexico, Mississippi, and Michigan). Both lawsuits were assigned to a District judge who was nominated by President Obama. As a result, it is not anticipated that the injunction will be granted. Moreover, while both groups have indicated that they will appeal a denial of the injunction, it could take longer than the available time (i.e. time before the December 1st effective date) for the Appellate Court to hear/rule on the appeal.

On September 21, 2016, House Subcommittee on Workforce Protections Chair Tim Walberg proposed legislation (The Regulatory Relief for Small Businesses, Schools, and Nonprofits Act (H.R. 6094)) that while it does not change the FLSA Overtime Rule, would delay the rule’s effective date by six months. This bill was passed by the House of Representatives on September 28, 2016 and has moved over to the US Senate for consideration.  However, even if Congress passes this legislation before the effective date, it is likely that President Obama will veto this bill.

What should employers do?

As stated above, employers should not rely on these challenges to stop the new FLSA Overtime Rule from going into effect. It is imperative that employers continue to work out their compliance strategy and plan to be in compliance with the new rule by December 1st.