SURPRISE HALT TO THE NEW OVERTIME RULES

By Mark F. Kluger and William H. Healey

In a surprising turn of events, last evening, a federal judge in Texas issued a nationwide preliminary injunction temporarily blocking the new overtime rules that were expected to go into effect on December 1, 2016. The judge ruled in favor of 21 state Attorneys General and more than 50 business groups that had sued to block the changes and found that the new overtime regulations may have been adopted without the required Congressional authority. As a practical matter, the injunction prevents any enforcement of the new overtime rules until the injunction is lifted, a higher court overturns or stays it or the Department of Labor wins the trial on the merits.

We expect that many employers have already communicated to affected employees the changes that were to take place on December 1. Now, employers must decide whether to move forward with the changes or postpone them. The ultimate decision should take into account whether there is time to reverse any planned changes, the cost of such changes, whether such a reversal can be clearly communicated to the employees and the impact on employee morale for those that may be negatively affected by a reversal.

We recommend that you use caution when making changes in response to the injunction. Please contact us with your questions and concerns.