Will Restaurants and Other Employers Implement the New Overtime Rule on Dec. 1?

Employers nationwide, including those in the food and beverage industries, have been gearing up to implement the U.S. Department of Labor’s new overtime rule that was scheduled to take effect on December 1.  But, shortly before the Thanksgiving holiday, a Texas federal judge decided to block it, potentially affecting more than 4 million workers.

The Final Rule would have more than doubled the minimum standard salary level for overtime-exempt “white collar” employees—individuals employed in an executive, administrative, or professional (including the salaried computer exemption) capacity—to $47,476 annually (or $913 weekly). In other words, workers paid less than $47,476 would have been entitled to minimum wage and overtime pay under the federal Fair Labor Standards Act (FLSA), unless they fell within another exemption.

Many employers had already announced this wage-and-hour change. However, in State of Nevada v. United States Department of Labor, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction blocking the Final Rule. Thus, companies have been left scrambling, trying to decide whether to implement their planned changes under the Final Rule, or whether to risk decreasing employee morale by denying workers’ expectation of overtime pay for long work shifts. As the long-term effect of the judge’s ruling is uncertain, other companies are waiting to see how the Department of Labor responds. Legally compliant options for employers are further discussed here. Careful consideration to this decision must be given, and consulting an attorney is recommended.

Update (12/1/16): The Department of Labor filed a notice of appeal in the U.S. Court of Appeals for the Fifth Circuit on December 1.  We will let you know of any significant developments regarding this case.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm’s full disclaimer.