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DOL Overtime Rules on Hold – At Least for Now

  • By  Scott D. Calhoun
  • |
  • December 6, 2016

A Thanksgiving surprise from a Federal Court Judge in Texas will have a significant impact on many businesses, including financial advisors. A preliminary injunction was entered preventing the DOL’s changes to the overtime rules from going into effect as scheduled on December 1.

What does this mean for employers?

As a result, many businesses do not have to revamp their compensation structure to address meet the new standards. At least for now.

But this is not necessarily great news for all employers. Many businesses, especially those which are well-run by capable management to comply with federal regulations, have already put new compensation structures into effect and announced those changes to their employees in anticipation of the new overtime rules.

Can those businesses just say, “Sorry. Those rules don’t apply now, so we will not be paying you that extra money”? You tell me, but my guess is a resounding no – not without having a major employee morale crisis to deal with.

Back up? Or carry on?

So, what should those businesses do? Carry on. If you made significant compensation adjustments or revamped employee responsibilities to better fit with the rules that were to go into effect, you need to stick with them. You may be able to adjust future salaries to avoid getting compensation completely out of alignment, but for now it is probably best to take advantage of the positive morale your changes will generate.

For the procrastinators out there, you may have caught a break. But I would urge you not to simply ignore the situation.

What’s next?

The injunction, while total, is not permanent. The lawyers are just beginning to make their arguments, and a final ruling from the court will not occur until all the facts and evidence are considered.

Most analysts believe the judge is likely to throw the regulations out, but there is no way to know for sure. And even if the rules are completely struck down, it is possible that a deal could be put in place to issue new rules that lower the numbers somewhat but still result in a significant increase in overtime eligibility.

Stay tuned. Last week, I had a wonderful little blog article ready to go describing the overtime rules and their impact, but I have had to put it on the shelf. My guess is that at some point I will be pulling it back out, brushing it up a little, and urging you to pay attention to new rules. Whatever they are.

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Author Bio

Scott serves as Ironstone’s legal counsel and has more than 25 years’ experience in corporate law. He has a broad base of experience in the formation and structuring of all types of business entities and non-profit organizations as well as in mergers and acquisitions. Scott advises clients on a full range of business matters, including business entity formation, securities offerings, trademark registration and related agreements, lease negotiations, stock or asset acquisitions, employment agreements, partnership agreements, franchise agreements and related issues, secured lending or other financial transactions, shareholder agreements, and LLC operating agreements. Mr. Calhoun also has significant experience with estate planning, wills and trust drafting, and estate administration. Mr. Calhoun has served as general corporate counsel for a large number of small and medium size businesses. As corporate counsel, he advises clients on the full range of business legal matters described above, and he also consults on general business issues faced by those clients. His counsel also includes planning and implementation advice concerning asset protection and business succession issues, which often entails proper use of trusts and other planning vehicles. In the broader area of estate planning, Scott has significant experience with estate tax matters, drafting of wills, life insurance trusts, and other estate planning documents, and estate administration.