On November 22, 2016, U.S. District Judge Amos Mazzant (Eastern District of Texas) issued a preliminary injunction that halts the DOL’s new regulation, which raises the salary threshold of employees receiving overtime compensation from $23,660 to $47,476. Passed under the 1938 Fair Labor Standards Act (FLSA), the rule also requires mandatory adjustments every three years.
This decision means the new overtime rules will not be implemented on Dec. 1. The regulations could take affect at a later date, or not happen at all. In a statement published shortly after the announcement of the injunction, the DOL said it would weigh “all of our legal options” and expressed that “[w]e strongly disagree with the decision by the court.” As expected, the DOL filed a notice to appeal the decision to the U.S. Circuit Court of Appeals for the Fifth Circuit. However, the incoming Secretary of Labor may withdraw the appeal, making this injunction permanent.
Regardless of what happens next in the political realm, nonprofits that have already planned to adjust staff salaries, work policies, and internal operations in anticipation of the Dec. 1 deadline can still carry out these changes if they choose. Whether you decide to meet, surpass, or come close to the salary thresholds issued by the DOL, there’s nothing stopping you from making a proactive decision to improve your nonprofit’s pay policies.
However, it should be assumed that the overtime regulations will not become law until further notice. If you have already implemented changes but decide to undo them, be cautious as it may impact employee morale and other relationship issues. Each workplace is unique and nonprofits must consider which approach will cause the least disruption. If you have communicated proposed changes with your employees as a group, or told individual employees their wages will be adjusted or they will become eligible for overtime compensation, be sure to inform them of your final decision.
It remains important to stay in compliance with existing overtime rules and all organizations should be sure that staff are correctly categorized as exempt or nonexempt. In addition, even the small number of organizations that are not required to pay overtime can choose to do so as a way to improve staff retention and recruitment, and remain competitive with other employers. Also, overtime pay improves pay equity.
Please follow the National Council of Nonprofits (@NatlCouncilNPs) or 501 Commons on social media (@501Commons) for timely updates.