The FLSA Injunction: Next Steps for HR Leaders
A federal judge in Texas has issued a nationwide injunction against the new overtime rule that would've impacted more than 4 million U.S. employees on Dec. 1, according to the DOL. The FLSA injunction means that the new overtime rule won't be implemented until a final court ruling is issued, leaving employers in limbo until the legal issues are resolved in court.
Regulatory Overreach
District Judge Amos Mazzant issued the injunction on Nov. 22. He agreed with the 21 states and more than 50 businesses — including the U.S. Chamber of Commerce — that claim the new overtime rule is unlawful, according to Reuters. The judge claims by changing the FLSA, the DOL overstepped its authority. "The judge said the increase to the 40th percentile of all weekly earnings in the U.S. effectively eliminated the exception in labor law for 'bona fide executive, administrative or professional' employees," Forbes reports.
The government pleaded for the judge to hold off on the injunction, but their plea was rejected. According to Forbes, the judge said the states would face immediate harm by being forced to either raise thousands of salaries or cut back on work hours.
4 Steps Forward for HR Leaders
As there are very few similar compliance-related precedents to look to for guidance, no really knows what's going to happen next. HR leaders should proceed cautiously and be ready to act as soon as the court makes its final decision.
In the meantime, here are four steps HR leaders can take to stay prepared.
1. Go Ahead as Planned ...
A preliminary injunction doesn't mean the new overtime rule won't be implemented — it simply delays implementation pending a final court decision. It is still very possible that the injunction could be reversed and the FLSA changes would be reinstated retroactively. It may seem tempting to take a wait-and-see approach, but as you've probably already raised salaries, reclassified employees, updated time and attendance systems and communicated changes to your employees, you're more than likely better served by going ahead with your initial plans.
You don't want to be left scrambling if the FLSA changes are retroactively restored and your organization doesn't have employees' time properly tracked. Additionally, you may already discovered through the FLSA preparation process that some of your workforce had been misclassfied all along. Whether the rule is restored or not, you will still be responsible to ensure those employees are properly classified under the existing terms of the FLSA.
2. ... But Have a Backup Plan Ready
In these times of uncertainty, it'd be wise to encourage the C-suite to decide how your organization will move forward should the FLSA be altered permanently. Communicate with your in-house or external legal teams and do your best to forecast the possible outcomes. You won't be able to prepare for every eventuality, but you can at least lay the groundwork with your executives to be ready to pivot no matter how the FLSA evolves.
3. Communicate the Implications of the Injunction to Employees
Employees who have been reclassified or are due to receive raises will more than likely be worried about what the injunction will mean for them. You should quickly communicate any information you have about the injunction, relay the organizational plan moving forward and let your employees know that their raises and classifications will not be affected.
4. Rely on Systems to Keep You Agile
The ability to remain flexible and maintain your business needs will still be key. Verify with your IT and systems administrators that the systems you have in place are ready to adapt quickly to whatever may come next. By having all the employee data you need available in real time, you'll have access to actionable, data-driven insights to help inform your decision-making and move forward quickly.
For the foreseeable future, HR leaders should monitor the federal court case regarding the new overtime rules while proceeding as planned. By relying on systems and processes that emphasize agility, your organization should be ready to adapt to whatever form the FLSA finally takes once it winds its way through the judicial process.