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HR News
Federal Judge Blocks Overtime Expansion
By: Shabnam Rosales - Director, Human Resources
A Texas federal judge issued a preliminary injunction Tuesday, November 22, 2016, effectively delaying the Department of Labor's (DOL's) recent update to guidelines determining overtime pay eligibility. The US Chamber of Commerce partnered with 21 states to file an emergency motion in October, questioning the authority of the DOL to determine such provisions. The ruling was set to take effect December 1, 2016.
Outlined by the Fair Labor Standards Act (FLSA), employment classification is the determination of overtime eligibility. To be found eligible for overtime pay, employees must demonstrate that they are not covered under various administrative or executive exemptions, earn wages below the standard salary level, and are subject to reduction in pay due to quality or quantity of work performed. The provisions in question date back to 2014, when President Obama signed a memorandum specifically directing the DOL to update regulations on exemption classifications, increasing the standard salary level threshold from $455 weekly to $913.
The argument from the states and the Chamber is that an adjustment to the standard salary level places an undue burden on small businesses and employers, in particular to non-profit organizations, potentially increasing overhead costs and decreasing their ability to fulfill their missions. Judge Amos Mazzant of the US District Court for the Eastern District of Texas issued the ruling, citing that "a preliminary injunction preserves the status quo while the court determines the department's authority to make the final rule as well as the final rule's validity." This may provide some administrative relief to organizations facing increased issues when attempting to comply with the DOL mandate.
Already facing amplified scrutiny on overhead spending, the prospect of increased overtime pay could pose additional stress to nonprofit organizations. Channeling operational budgets toward personnel costs, as opposed to boosting programmatic initiatives, deters an already challenging process of shaping new fiscal directives and opportunities for the coming year. Additionally, specific metrics which potentially affect rating scores-from services such as Charity Navigator-may impact an organization's ability to garner additional donors, board members and staff.
Navigating the changing tide of HR legislation can be difficult for small businesses and non-profit organizations alike, so seeking outside advice and counsel may prove beneficial. OAI offers HR and other professional services to supplement in-house operations, and can provide much-needed insight for the changes addressed above. Stay tuned as we follow the course of this ruling-likely to face long-standing delays or possible be overturned under the next administration.
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