In the wake of yesterday’s news that a Texas federal judge issued a nationwide injunction halting the FLSA overtime regulations, scheduled to become effective December 1, 2016, many employers are asking “what now.” The answer will continue to develop. For now, though, here are some initial things to keep in mind:
- Realize that the regulations scheduled to go into effect on December 1, 2016 are now halted nationwide. This means that for the time being, the minimum salary threshold remains at $23,660 a year ($455 per week).
- Realize that this decision is not final and is subject to change. The federal court only issued a preliminary injunction. The next procedural step (if the parties choose to continue) is for discovery to be conducted, a trial on the merits, and a decision on whether a permanent injunction should be issued. It is possible the judge could change his decision at the permanent injunction stage of the case. Regardless of the outcome at that stage, appeals will be available to the U.S. Court of Appeals for the Fifth Circuit and the U.S. Supreme Court. Although this scenario is less likely in the Fifth Circuit, with the passing of Justice Antonin Scalia, it is possible that the U.S. Supreme Court could ultimately rule in the U.S. Department of Labor’s favor. Of course, that assumes the Department continues to pursue this matter and continues to pursue official enactment of the regulations. Recall that the Department is an executive agency, which after January, will be under President-Elect Donald Trump. Given the differences between President Barack Obama and President Trump’s labor initiatives, it is possible that President-Elect Trump will instruct the Department not to continue pursuing this case. There are many variables and all of these scenarios will take months, or even years, to play out. The point is the case needs to be monitored and employers need to be prepared for the different scenarios.
- Realize that not all the changes that may have been made in response to the new regulations related to the salary basis test. Many employers used the change in the regulations to address other components of the FLSA that were not affected by the ruling, such as classifications. To the extent changes like this were made, they were not altered by the ruling.
As is easily seen, the outcome of this saga remains to be seen. For now, employers can be thankful this Thanksgiving for a reprieve from what was about to become a major change in the FLSA.