Despite Recent Challenges to Overtime Rule, Employers Should Continue Preparing for Implementation on December 1
On September 20, two lawsuits were filed in federal court seeking to stop the new overtime regulations from going into effect on December 1. One lawsuit was filed by the U.S. Chamber of Commerce in conjunction with a number of other business groups. The other lawsuit was filed by a coalition of 21 states (Nevada, Texas, Alabama, Arizona, Arkansas, Georgia, Indiana, Kansas, Louisiana, Nebraska, Ohio, Oklahoma, South Carolina, Utah, Wisconsin, Kentucky, Iowa, Maine, New Mexico, Mississippi, and Michigan). Both lawsuits were filed in the Eastern District of Texas and seek an injunction to block the overtime rule from going into effect.
On September 21, House Republicans introduced a bill that would push back implementation of the overtime rule for 6 months, i.e. to June 1, 2017.
While these recent actions have the potential to delay or stop implementation of the overtime rule, employers should continue preparing for the changes to go into effect on December 1. The Texas lawsuits have been assigned to a Judge who was nominated by President Obama in 2014, so it is unlikely that he will grant the injunction that the lawsuits are seeking. Although it is expected that the plaintiffs in the lawsuits would then appeal to the Fifth Circuit—which might look upon the lawsuits more favorably—it will take time for the cases to work their way through the system. Similarly, if the House bill were passed, it is almost certain that President Obama would veto the bill.
Therefore, given the analyses that employers need to perform on their workforce to determine whether formerly exempt employees will remain exempt, and the administrative burden of reclassifying employees, employers should not delay preparing for implementation of the overtime rule while the lawsuits and the House bill progress. If you have questions about how to prepare for the new overtime rule or how the recent challenges may affect implementation, contact a member of Verrill Dana's Labor & Employment practice group.