Dive Brief:
- A preliminary injunction against the FLSA overtime rule, set to take effect December 1st, was granted by Obama appointee U.S. District Judge Amos Mazzant on November 22, as reported HR Dive last week.
- The overtime rule would have had an immediate impact on those earning salaries up to $47,476, as these employees would have been eligible for overtime time-and-a-half pay.
- The rule change had left many companies associated with the supply chain scrambling to adjust their payroll to comply, either by raising employees above the salary threshold or by changing salaried employees to hourly status or eliminating those positions entirely.
Dive Insight:
Companies working within the supply chain were likely to experience a significant impact by the FLSA rule change, especially as seasonal demand is ready to increase. By the nature of the industry, both assistant managers overseeing product flow as well as hourly employees working around the clock to ensure timely delivery would have seen an increase in overtime, adding significant payroll costs to those companies.
However, with the injunction enacted days before the new law was to take effect, many companies will be left in limbo. Do companies reverse the payroll changes that they have made in preparation for compliance, with the risk that the Department of Labor may eventually successfully defend the law? Or do companies keep their payroll changes in effect despite the injunction, which could result in significant unnecessary overpayment in wages?
Companies, especially those in the supply chain that make significant capital investments, desire certainty with new regulations. Whatever the law may turn out to be, those companies rely on the new rules to shape their budget planning, payroll and capital investment. Uncertainty over payroll makes this planning significantly more difficult, but with a new business-friendly administration close at hand, President-elect Trump may see an opportunity to begin implementing his promised regulatory rollbacks in pointed fashion.
