Overtime Rule Change Injunction: What Should Dealers Do Now?
By now you have heard about the Fair Labor Standards Act (FLSA) rule change, issued in May, that would raise the income that a person can earn while being eligible for overtime pay. You also have heard that a federal judge right here in Texas issued a preliminary injunction against implementation of this change last Tuesday.This 11th-hour change has left many small business owners frustrated because they already made plans to implement the new rules on December 1. They either raised salaries to the new $47,476 threshold to avoid paying overtime, or they reclassified employees from salary to hourly, or made some other changes to try to control their personnel costs. No matter what employers did to prepare for the new rules, they now want to know, WHAT NOW?!
The short answer is “it depends”. One school of thought says that dealers should revert to their previous pay practices and simply pray that the judge's temporary injunction becomes permanent. Another school of thought says that dealers should move forward with their compliance plans as planned.
Either option is a gamble. If the injunction becomes permanent, then those dealers who complied with the rule will be paying more money in salaries than they are required to. If the injunction is struck down, then those dealers who chose not to adjust their pay scales will be forced to quickly comply with the law.
A safe bet would be to make no further changes or adjustments to your salary payment plans. If you already prepared to comply with the new rule, then stick with it. If you have not prepared to comply with the new rule, then stick with it. At this point, a dealer's concerns are with (1) budget stability, and (2) employee relations. For planning's sake, stick with your budgeted personnel expenses for the remainder of the fiscal year. Once the rule completes its journey through the notoriously lengthy court process, you can reassess your budget with the actual rule. From an employee relations standpoint, you would rather not have the delicate conversation with staff members who expected their pay to increase on December 1, informing them that, “Oops, surprise! You will not receive the money/hours you expected”, only to have to reverse yourself AGAIN in a few months.
Stay tuned. Your Association is closely monitoring this issue.