Black Box Intelligence (formerly TDn2K) Update: FSLA overtime regulations halted by Texas judge

Yesterday, a temporary injunction was placed on the new FLSA overtime regulations rule, which would have come into effect on December 1st. The rule would have caused many restaurant companies to have to increase their annual salaries to a significant portion of their managers to meet the new requirements as well as reclassify some salaried employees into their hourly employee ranks. Whether the change in regulation ever gets implemented is yet to be seen. However, the delay does leave many restaurant companies frustrated after having to incur the cost and time to prepare for the change (and some even starting to make changes in salaries and employee classification) only to find the requirements they were planning for might not exist in the near future; or at all.

We asked Tom Reddin, Chair-Labor, Employment & Immigration Practice Group, Winstead, PC and Joe Kefauver, Managing Partner of Align Public Strategies to share their best advice with our members:

Tom Reddin: “Yesterday, a Texas federal judge entered a nationwide injunction blocking the DOL from implementing the controversial rule expanding overtime protections, saying the measure improperly created a salary-level test for determining which workers fall under the FLSA’s white collar exemptions. This preliminary injunction preserves the status quo while the court determines the DOL’s authority to make a final rule as well as the final rule’s validity. It is difficult to predict at this juncture whether the new regulations will ultimately be found to be invalid, or whether the DOL will appeal this ruling and attempt to get the injunction lifted. For now, however, employer’s will not be required to comply with the new salary test which was scheduled to go into effect next week Thursday, December 1, 2016. Employers who have already announced changes to salaries or classification status have a difficult decision to make as to whether to proceed with those changes or advise affected employees that as a result of the injunction, those changes are now on hold until further clarification is received from the courts.”

Joe Kefauver: “While this is very good news, this is technically only a delay at this point and the judge could rule at any time in favor of the Department of Labor. Conversely, the judge may ultimately rule against the DOL and the rule is voided pending likely appeals by the DOL. Or the delay could be long enough for a new Trump Administration and Congress to overhaul or completely repeal the rule, likely resulting in further litigation at that point as well. The next few days and weeks will potentially bring some level of clarity but companies still need to be prepared in case the injunction is lifted sooner than anticipated and the rule goes into effect.”

We will continue to update our members as new information becomes available.

Check out more coverage from Nation’s Restaurant News:

Overtime rule freeze likely too late for restaurants

DOL to challenge overtime rules freeze

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