UPDATE: Federal Judge Blocks Overtime Rule
November 22, 2016 - Late on Tuesday, a federal district judge in Texas issued a preliminary injunction blocking implementation of the Overtime Final Rule, ruling that the U.S. Department of Labor exceeded its authority. Barring a last-minute appeal, the overtime rule will not go into effect as scheduled on December 1 because of this decision.
At issue is the question of which employees qualify for an exemption from the requirement under the federal Fair Labor Standards Act (FLSA) that most employees are entitled to time and a half overtime pay for work in excess of 40 hours in a week. The FLSA exempts from the overtime requirement “any employee employed in a bona fide executive, administrative, or professional capacity,” often called the EAP or “white collar” employees. Current regulations require that employees must possess the duties of executives, administrative workers, or professionals and be paid more than a minimum salary. The overtime rule published by the Labor Department in May, and set to go into effect on December 1, would have more than doubled the existing “salary level test” for exempt white collar employees from $455 per week ($23,660 per year) to $913 per week ($47,476 per year).
Twenty-one Governors and Attorneys General filed suit in federal court challenging the overtime rule on several grounds. Siding with the states, Federal Judge Amos Mazzant held that the white collar exemption is clearly based on the duties that individual employees perform, and that the Labor Department did not have the authority to create a different or higher standard. Specifically, he ruled: “Congress gave the Department the authority to define what type of duties qualify [for the overtime exemption] — it did not give the Department the authority to supplant the duties test and establish a salary test that causes bona fide EAP’s to suddenly lose their exemption ‘irrespective of their job duties and responsibilities.’”
The judge issued a nationwide preliminary injunction. The Department of Labor is expected to appeal the decision, meaning that injunction could be lifted and the overtime rule put in place in a matter of weeks or months.
In partnership with the National Council of Nonprofits, we will keep you updated on any new developments.
Information Prior to November 22, 2016:
The U.S. Department of Labor announced overtime regulations this past May that, when they go into effect on December 1, 2016, will mean that most employees earning less than $47,500 per year will be entitled to overtime compensation, regardless of whether they are currently classified as executive, administrative, or professional (white-collar) workers. There are a number of resources we have posted on this page to help you learn more about these changes, how it will impact your organization and steps you can take to comply with the new regulations.
Webinar: Complying with the New Overtime Rule under the FLSA
The Wyoming Nonprofit Network presented a webinar on November 4th on Complying with the New Overtime Rule under the FLSA. This new rules goes into effect December 1, 2016. The presenters were Gregory Dyekman, Dray, Dyekman, Reed, and Healey, PC, and Brittany Ashby, Align. Topics included enterprise and individual coverage, duties test, options for complying with the new rule, and the 40 hour work week. Also discussed was employees as volunteers. The recording and slides from this webinar are available, $10 for members and $35 for non-members. Email email@example.com.
National Council of Nonprofits:
Our national partner organization, the National Council of Nonprofits, has a webpage with the latest information on the rule and how it applies to nonprofits. In addition, David L. Thompson, Vice President of Public Policy, wrote a concise overview of options for nonprofits: Known, Unknowns, and Options for Nonprofits on the Overtime Final Rule.
The Nonprofit Overtime Implementation Conundrum - Results of the National Survey of Nonprofits with Government Grants and Contracts Regarding the New DOL Overtime Rules
US Department of Labor Resources:
DOL Webinar for the Nonprofit Sector - June 7, 2016 recording
Guidance for Non-Profit Organizations on Paying Overtime under Fair Labor Standards Act (published May 18, 2016)
Non-Enforcement Special Exception (extends enforcement to March 2019 for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds)
Independent Sector Resources:
You can watch a 2-part Digital Learning Event Series on New Overtime Pay Rules. This first recording is similar to the DOL Webinar for the Nonprofit Sector. The second recording outlines next steps for reviewing your options by a panel of experts.
Do the New Overtime Rules Apply to You?
by Brad Cave, Partner, Holland & Hart LLP, Cheyenne, WY