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In a ruling that has significant implications for many industries, on Nov. 22, a Texas federal judge dealt the US Department of Labor a major setback by preliminarily enjoining DOL's overtime rule which was set to go into effect on Dec. 1, 2016. The nationwide injunction means that employers do not have to comply with the rule on Dec. 1. Most employers have been actively planning or implementing changes with respect to how they compensate employees and classify them for purposes of overtime eligibility.

The new FLSA rule would raise the minimum salary requirement for employees to be exempt from overtime under the FLSA from $455 per week ($23,660 per year) to $913 ($47,476). However, a last minute Court injunction has now resulted in employers not needing to comply with the new regulations in the immediate term and presents uncertainty over whether this new FLSA rule will ever actually be implemented.

Employers should realize that, although they are not required to comply with the new rule on Dec.1, reversing course on any previously announced changes could present a variety of repercussions, including potential claims against the employer for misclassification of overtime exempt status or even breach of contract claims. As such, employers should consult with counsel if they are contemplating modifying their employee compensation plans based on this injunction, especially if the modifications alter plans that had already been announced to employees. Be diligent and continue to evaluate the FLSA status of your employees by reviewing job duties and descriptions.

For more information, please contact your local UHY LLP professional, or visit us on the web at