ComplyRightComplyRightComplyRightComplyRight
  • RESOURCES
    • Knowledge Center
      • Tip Sheets
      • E-Guides
      • Podcasts
      • Infographics
      • Videos
    • Webinars
      • Upcoming
      • On Demand
    • Research and Trends
      • Compliance Survey
      • Trend Surveys
      • Minimum Wage Monitor
    • HR 101 Courses

      HR 101 Courses
      Learn More
  • TOPICS
    • I want to learn about:
      • Hiring an Employee
      • Creating Policies
      • Paying Employees
      • Discrimination & Harassment
    • Column 2
      • Employment Law
      • Labor Law Postings
      • Employee Leave
      • Employee Recordkeeping
    • Category 3
      • Independent Contractors
      • Tax Reporting
      • Improving Employee Performance
      • Firing an Employee
    • Would Your Workplace Practices Hold Up in an EEOC Investigation?

      EEOC Investigation
      Read More
  • SOLUTIONS
    • Employee Management
      • Hiring
      • Time and Attendance
      • Training and Safety
      • Recordkeeping
      • Employee Policies
    • Labor Law Posters
      • Poster Guard® Service
      • ComplyRight Posters
      • Electronic Posters
      • Employee Handouts
      • Partner Solutions
    • Tax Information Reporting
      • DIY Filing Solutions
      • Processing Services
      • Partner Solutions
    • Featured Solution

      Poster Guard Compliance Protection
      Learn More
  • ABOUT
    • Who is ComplyRight
      • Mission
      • Core Values
      • Leaders
      • Newsroom
      • Contact
    • Careers
      • Culture
      • Benefits and Perks
    • Brands
      • HRdirect
      • HRdirect Smart Apps
      • Poster Guard
      • eFile4Biz
    • Join Our Team

      Join Our Team
      Learn More
  • SUBSCRIBE

What Employers Need to Know About the Delayed FLSA Overtime Rule

Published on December 12, 2016
  • Time and Pay
  • FLSA
  • Overtime

As you may have heard, the overtime rule from the Department of Labor (DOL) is on hold due to a last-minute move by a federal district court. In response to arguments and concerns by various states and business groups, a judge called the regulation “unlawful” and issued a preliminary injunction on November 22 — a week before the rule was to take effect across the country. The DOL has since appealed; the agency stands by the rule and its lawfulness — and strongly disagrees with the court decision blocking it.

Weigh Your Situation Carefully

What happens now? What should employers do during this time of uncertainty?

Until we know more about the outcome with the DOL’s appeal, the scheduled overtime rule is “on hold.” Because of this, if you waited to make any changes, you can continue business as usual. But if you made specific decisions in preparation for the overtime rule, such as increasing salary or converting exempt employees to non-exempt hourly employees, you may be unclear about what to do next. Let’s look at the two situations:

You increased employee salaries to meet the new $47,476 threshold: It’s best to keep employees at the new salary level for a few reasons. First, you must consider potential legal claims for taking away “what was promised” as well as morale issues. Salary adjustment aside, if employees question their status and seek legal counsel (or go the DOL), they may discover they were not properly classified in the first place.

“FLSA litigation has increased year after year since 2000, and it is the number one class action in federal court,” says Shanna Wall, Compliance Attorney for ComplyRight.” Last year alone, class-action settlements reached more than $400 million. And the DOL recovered $246 million in back wages.”

You changed employee status from exempt to non-exempt: If you converted the salaries of previous exempt employees to an hourly wage, you shouldn’t automatically revert them back to salaried status. The court’s ultimate decision is uncertain, and you don’t want to have to go through the reclassification process again in a few weeks or months. And like the previous scenario, bouncing workers back and forth between exempt and non-exempt may trigger questions about their true legal status — and potentially open your business up to litigation.

Take a Careful Look at Employee Classification

The most important thing to do now, and the best way to protect your business from lawsuits, is to conduct a thorough audit of each employee’s payroll status. An employee can only be exempt from overtime pay if they satisfy specific tests by the DOL, which reflect their actual responsibilities and not a title or job description. These duties tests — typically for executive, administrative and professional employees — are a critical step in properly classifying employees. Plus, they didn’t change with the proposed overtime rule; only the minimum salary did.

“The importance of correctly classifying employees cannot be overstated,” Wall says. “Employers need to be mindful that salary is only one factor in determining exempt or non-exempt status.”

If you find an employee is improperly classified, take this opportunity to correct the error. Because most U.S. employers are reconsidering payroll status due to this pending FLSA overtime change, it’s less likely to raise red flags if you need to make adjustments.

SA Attendance Calendar | Time & Pay

HRdirect SmartApps Attendance Tracking

Related Content

  • FLSA Violations
    5 Mistakes Small Businesses Make That Could Lead to FLSA Violations
    October 22, 2020

    Time and pay rules under the Fair Labor Standards Act (FLSA) are complicated — particularly for small businesses without the … Read more

    Time and Pay

    FLSA

    Worker Classification

  • Flexible scheduling
    How to Implement Flexible Scheduling That’s a Win-Win for You and Your Employees
    May 26, 2020

    What used to be the rare exception for a handful of employees has become more mainstream. Today, flexible scheduling is … Read more

    Time and Pay

    Attendance

  • Unlimited PTO pros and con
    Considering an Unlimited PTO Policy? Carefully Weigh these Pros and Cons
    January 21, 2020

    Who doesn’t dream of having unlimited Paid Time Off (PTO)? Well for some employees, this dream is becoming a reality. … Read more

    Time and Pay

    Policies

  • FLSA hours worked
    Counting FLSA Hours Worked: How to Get it Right to Satisfy Upcoming Overtime Rules and Calculation
    January 8, 2020

    Wage and hour violations are a frequent source of trouble for employers, where Fair Labor Standards Act (FLSA) oversights can … Read more

    Time and Pay

    FLSA

    Overtime

  • new flsa overtime rule
    FAQs About the New FLSA Overtime Rule
    October 2019

    The DOL’s announcement of a new rule under the Fair Labor Standards Act (FLSA) has many employers scratching their heads. … Read more

    Time and Pay

    Overtime

  • Ready, Set, Go: Critical Actions Every Employer Should Take with the New FLSA Overtime Ruleplay-button
    Ready, Set, Go: Critical Actions Every Employer Should Take with the New FLSA Overtime Rule
    October 2019

    After months of anticipation, the U.S. Department of Labor announced the final rule on the overtime provisions under the Fair … Read more

    Time and Pay

    FLSA

    Overtime

  • Here We Go Again: DOL Announces Potential New FLSA Overtime Regulations
    Update on DOL Overtime Regulations: New FLSA Overtime Rule Just Finalized and Effective January 2020
    September 25, 2019

    The wait and uncertainty regarding potential new overtime regulations are over. On September 24, 2019, the Department of Labor (DOL) … Read more

    Time and Pay

    FLSA

    Overtime

  • Paying Hourly Employees: A Look at Common Scenarios Employers Get Wrong
    Paying Hourly Employees: A Look at Common Scenarios Employers Get Wrong
    August 12, 2019

    If you manage hourly employees, it’s critical to accurately track all of their hours worked. If you cheat an employee … Read more

    Time and Pay

    Overtime

Newsletter Subscribe

Get the latest news and free resources from ComplyRight delivered straight to your inbox.

Thank You

You've just unlocked a wealth of FREE resources to build HR confidence.

ComplyRight provides free educational resources related to employee management, labor law and compliance. Better understand HR basics and learn how to address specific issues by browsing our knowledge center.

Please enter a valid email address.

Thank you. We already have your email address on file.

An error occurred while processing your request. Please try again.

Upcoming Webinar

Webinar Name

Date & Time

Presented by:

Learn More
Shop Our Brands 
HRdirect
HRdirect Smart Apps
Poster Guard
Formstax eFile4Biz

At ComplyRight, our mission is to free employers from the burden of tracking and complying with the complex web of federal, state and local employment laws, so they can stay focused on managing and growing their businesses.

©2020 ComplyRight, Inc.

Resources

  • Knowledge Center
  • Webinars
  • Research and Trends
  • Courses

Solutions

  • Employee Management
  • Labor Law Posters
  • Tax Information Reporting

About

  • Who is ComplyRight
  • Careers
  • Newsroom
  • Brands

Legal

  • Privacy Policy
  • Terms of Use

Popular Topics

Performance Policies Employee Leave Discrimination and Harassment Employment Law HiringLabor Law PostingsIndependent Contractors

Subscribe to Our Newsletter

Subscribe

Follow Us

  • RESOURCES
    • Knowledge Center
      • Tip Sheets
      • E-Guides
      • Podcasts
      • Infographics
      • Videos
    • Webinars
      • Upcoming
      • On Demand Webinars
    • Research and Trends
      • Compliance Survey
      • Trend Surveys
      • Minimum Wage Monitor
    • HR 101 Courses
  • TOPICS
    • Hiring an Employee
    • Creating Policies
    • Paying Employees
    • Discrimination & Harassment
    • Employment Law
    • Labor Law Postings
    • Employee Leave
    • Employee Recordkeeping
    • Independent Contractors
    • Tax Reporting
    • Improving Employee Performance
    • Firing an Employee
  • SOLUTIONS
    • Employee Management
      • Hiring
      • Time and Attendance
      • Training and Safety
      • Recordkeeping
      • Employee Policies
    • Labor Law Posters
      • ComplyRight Posters
      • Poster Guard®
      • Partner Solutions
    • Tax Information Reporting
      • DIY Filling Solutions
      • Processing Services
      • Partner Solutions
  • ABOUT
    • Who is ComplyRight
    • Newsroom
    • Careers
    • Brands
    • Contact Us
  • SUBSCRIBE
ComplyRight