Overtime expansion injunction leaves businesses backtracking

By CHRIS BUCHER - Freeman Staff

December 3, 2016

WAUKESHA - For many area businesses, the first expansion of federal overtime rules since 2004 meant pay raises for some employees, as well as various changes to company policies.

Those affected businesses worked tirelessly to alter their pay structure and policies to abide by the new law, which was passed in May by the federal Department of Labor and would have expanded overtime eligibility for millions of Americans when it was slated to go into effect Dec. 1.

But a ruling Nov. 22 by U.S. District Judge Amos Mazzant put the overtime law on hold and sent some companies scrambling to pick up the pieces. Mazzant’s ruling sided with the 21 states and groups that opted to file motions opposing the changes.

“(Businesses have) been working and creating their plan for compliance since May,” said Laurie Greenlees, human resource business advisor/manager for Milwaukee- based MRA. “For some employers, that included increasing salaries for employees and for other employers, that meant changing their status to nonexempt and oftentimes converting their pay from a salary basis to an hourly basis.”

MRA is a nonprofit trade association that serves over 4,000 employers more than 800,000 employees. With constant communication with those businesses, the organization has heard from many of its members with concerns about the overtime expansion law.

What the proposed law does

If and when initiated, the new overtime law would give salaried employees making less than $47,476 a year overtime pay when they work more than 40 hours a week. Currently, only workers who make up to $23,660 a year qualify for overtime pay.

There are exceptions to the law, however, and some businesses and employees could be exempt if they meet specific criteria, MRA Human Resource Government Affairs Director Kathryn Helmke said.

“You have to be paid on a salary basis, meaning your salary has to be consistently paid to you regardless of the number of hours you work,” she said. “Finally, you have to meet the salary threshold and you have to meet the exempt duties test ... they’re called white collar exemptions.”

Greenlees said a number of member employers are disappointed with the convoluted situation that’s resulted, mostly because of the uncertainty it creates. “They’re very frustrated,” Greenlees said. “This injunction was made eight days before the effective date and really many employers were closed over Thanksgiving, so it’s really giving them four business days to re-evaluate their plan.”

She said many businesses in the area had already made policy changes that went into effect in early November, thinking the law would move forward as described. But with an injunction filed, companies are left with important decisions to make on whether they want to backtrack on pay raises or status changes that had been handed out and revert to the former policy, or continue to move forward as planned.

“It creates a very sensitive issue for employers,” Greenlees said. “Because when you’re talking about changing someone’s pay, benefits and status, it has a large impact on employee morale.”

The latest

But, as Helmke said, the Department of Labor filed an appeal with the U.S. Court of Appeals for the Fifth Circuit in New Orleans on Thursday, meaning the timeline for the new law to be enacted continues to be in question. Typically, a review will be had with time allotted for attorneys on both sides to voice their case. Helmke said some people estimate it’s “very likely that a decision wouldn’t be forthcoming till January or perhaps even after the new administration takes over.”

Essentially, the delay may give President-elect Donald Trump a chance to have a say about the law.