For the past few months, HR departments across the country have been scrambling to comply with the impending change to the federal overtime rules. On Dec. 1, the new rule would have doubled the threshold for exemption status, effectively making a large number of salaried employees into hourly workers with the right to overtime pay. However, a Federal judge has put the new law on hold, reported Forbes Magazine.
Keep reading to find out what this means for your business:
No changes, for now
The December deadline will come and go without any impact on overtime laws, however it’s still not gone for good. According to Forbes, the judge who stopped the impending rule change, a member of the fifth circuit, must hear the cases presented by those who believe that the Department of Labor is overstepping its bounds with the proposed changes. Until then, the rule will stay on hiatus. That said, it is still possible that the law will eventually be passed – though the battle will be considerably tougher.
Opponents of the rule change claim that it would effectively make the duties test obsolete. That test is meant to determine who is exempt from overtime pay on the basis of their duties and responsibilities on the job.
According to the Society for Human Resources Management, the judge has stated, “If Congress intended the salary requirement to supplant the duties test, then Congress—and not the department—should make that change.”
In other words, by raising the salary threshold for non-exempt employees, the duties test would no longer apply – and it is the opinion of the opponents of the rule change that the DOL has no authority to supplant the duties test with a salary requirement. They claim that only Congress has that ability.
— USA TODAY (@USATODAY) November 23, 2016
HR departments keep their ears to the ground
In the wake of this news, HR departments in many businesses have been left waiting to see what happens. It’s likely that many had already set in motion the changes required to comply with the rule change. Some may have even raised employees’ salaries to above the proposed threshold. Others may have already begun to shift to an hourly time-keeping method. To stay safe, many HR departments will likely continue to plan to make changes. If the DOL fights back and wins, the new rule could go into effect at any time.
Although it seems unlikely that the rules will change this year, it’s best to be prepared for every contingency. HR professionals should keep a pulse on the situation so that they can act accordingly when the results of the trial are finalized. Either way, the ruling will affect millions of workers across the U.S. and the proposed rule change could alter the way thousands of businesses are operated, regardless of industry.
Does your company have a plan for dealing with the overtime rule change? Let us know about it by tweeting @MSIGTS.