Fair Labor Standards Act

By Joyce Chastian, Senior Consultant, The Krizner Group

FAIR LABOR STANDARDS ACT CHANGES TEMPORARILY BLOCKED

Last week, a federal court judge issued an injunction to temporarily block the changes to the Fair Labor Standards Act that were set to be effective on December 1, 2016. 

This “preliminary injunction preserves the status quo while the court determines the department’s authority to make the final rule as well as the final rule’s validity,” said Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas in his Nov. 22 ruling.

The emergency motion for a preliminary injunction was filed in October by 21 states and joined by the U. S. Chamber of Commerce.  The motion claimed that the Department of Labor exceeded its authority by raising the salary threshold too high and by providing for automatic adjustments to the threshold every three years.

Many employers have been working diligently to make changes to meet the December 1 effective date.  This ruling provides relief from the pending deadline of December 1.  It does not, however mean that changes aren’t coming.  This is a temporary reprieve.  We will likely see changes to the Fair Labor Standards Act.  Additionally, there are considerations for a revised form of the changes under the new presidential administration. 

What you do next depends on how far along you were with making classification or pay changes to comply with the anticipated regulations.  If you were in the process of finalizing classification changes but had not actually made changes, you may want to table those changes until we receive definitive news.  If you had already made changes to reclassify employees, you may want to consider the impact of reversing those changes on your employees.  A word of caution:  you cannot take back pay.  So, if you had already reclassified employees as non-exempt, and had paid overtime for hours worked in excess of forty in a week, you may not take back the overtime pay.  Also, if you had already implemented salary increases to $47,476 or above to continue with the exempt classification, you may not now deduct those wages already earned.  You may reduce the pay going forward since the FLSA regulation changes aren’t imminent, but you may want to consider the impact to employee morale if you choose that option. 

Our recommendation is that you continue your planning process so that implementation will be straightforward at such time as we receive the final regulations.  If you have already made changes you will need to evaluate whether continuing with the changes works for your organization or if you would like to suspend the changes pending the final legal outcome.  As always, we’re here to help.  Reach out if we can assist.