Federal Ruling Blocks New FLSA Overtime Rules

Last week, a federal judge in Sherman, Texas issued a preliminary injunction that blocks the U.S. Department of Labor from implementing the revised overtime regulations of the Fair Labor Standards Act (FLSA), which were set to become effective on December 1, 2016.

The ruling was made in response to a legal challenge brought by 21 states and a coalition of business groups.  The Department of Labor now has the option to appeal.

As a result of this injunction, the new overtime rules will not be implemented this week as planned, and employers will find themselves facing one of two scenarios:

  1. If the employer has not yet made any changes to compensation plans, they have more time to plan for the new regulations, if they are upheld.
  2. Employers who have made changes already can make one of the following decisions:
    • Do nothing and leave the changes in place
    • Suspend the changes until the final decision on the regulations is determined
    • Roll back the changes

To review the DOL overtime rules that are at the center of this litigation, please refer to the notice issued by Sax in August 2016. We will keep you updated as the legal process continues and further announcements are made.

If you have any questions, please contact Alan S. Isaacs, CPA, MBA at [email protected].

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