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Overtime Rule Blocked - Not Tackled

Wednesday November 23, 2016 comments

Overtime Rule – Blocked but Not Tackled

Big news yesterday – a federal judge has blocked the Department of Labor’s new Overtime Rule from taking effect next week. Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas, issued a preliminary injunction in a lawsuit challenging the Department of Labor’s authority to change the salary threshold.

As much as this is good news, it is only a preliminary injunction. It only means a delay while the court determines the Department of Labor’s authority to make the rule, as well as the rule’s validity. He could turn around and allow it take effect later. He could permanently bar it from taking effect. And the Department of Labor could challenge the decision. Make that will. And the Trump administration could still try to overturn the whole thing after January 20. So now what do you do? Here are 7 steps you can take with your team as soon as possible:

  1. Educate Your Team. Concisely explain how overtime works. Briefly explain the changes that were to take effect and what you were doing to comply. Talk about the preliminary injunction, what that means, and what may come next. If there was ever a time to increase awareness of government-imposed volatility impacting employers, it’s now.
  2. Explain Your Stance. It’s wise at this point to sit back and let the various governmental entities that be, figure out all this before trying to comply with something that could change further. Your people will understand that if you show how wild a ride it is trying to comply with a moving target. The good thing about a Preliminary Injunction is that everything reverts to what has been. In this case, it means the old rules apply for now.
  3. Focus on Business Viability and Jobs. The volatility is due to government regulation from a federal agency, and subsequent disagreement by the judicial branch about whether the agency had the authority to set law. It has nothing to do with the employment market, competition for talent, business performance, individual performance, or anything else that usually drives wages. Explain to your team that you’re doing your best to balance the ever-changing world that the organization operates in, and keep growing the business that provides their jobs.
  4. Be Transparent. Take advantage of this confusing time to be transparent about compensation. Explain the market – both the employment market that you compete for talent in, and the business market that you compete for business in. Show your people the thought that goes into balancing your desire to pay everyone more with your need to keep your expenses in line with your competition so that your pricing will be. It doesn’t work when those are out of whack.
  5. Talk Politics. You may as well; everyone else is. Some may applaud or blame President Elect Trump for overturning the Overtime Regulation. Nope. Right now, he doesn’t really have the power to do that. And the judge who issued the Preliminary Injunction was an Obama appointee. It has to do with a regulation from a federal agency staffed by many who were appointed by Obama, challenged by a judge appointed by President Obama. It has nothing to do with partisan politics. It has everything to do with how government does business (take that any way you want).
  6. Take the Time. You’ve just gotten a reprieve, but the regulation could stand. If it does – or if some piece of it does – be sure you have the best solution for you, your team, and your organization. There is a “conventional wisdom” way of addressing the regulation, which includes making lower paid professionals into nonexempt employees and making them clock in and out, or inflating salaries. There are other options that may be more appropriate for you. Follow this link for some other ideas.
  7. Learn from It. It’s wise not to make changes imposed by regulation until the date of the regulation. There were many who advised employers to act beforehand. That only works when the regulation is a done deal. When there are multiple lawsuits from state governments, businesses, and associations, when there is proposed legislation before Congress to undo it, when there’s an election with a candidate that has vowed to overturn the regulation, you should proceed with caution. Make plans, make contingency plans, but don’t implement until the effective date. Those who have already made changes either have to eat them or reverse them. There are consequences to either.

The business of being an employer can be challenging. Some of that’s due to human nature and the complexity of working with people. Some of it is due to the regulatory environment we operate in. Many aspects of either aren’t as easy – as black and white – as we may like. There are strategies that work in one organization that wouldn’t be effective in another. That’s another way of saying that a legally correct answer may be entirely wrong. People strategies and tailored solutions are the way to go. Even when the governmental environment seems so uncertain.



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