Batts Morrison Wales & Lee - News & Resources - Nonprofit Special Alert

Federal Judge Halts New Overtime Pay Rule

Temporary Injunction Puts Implementation in Question

By Sally Wagenmaker, Esq. and Michael E. Batts, CPA

A federal judge yesterday issued a nationwide temporary injunction halting the implementation of a new overtime pay rule scheduled to go into effect on December 1, 2016.  The judge, Amos L. Mazzant III – appointed by President Obama – ruled that the Obama administration (specifically, the U.S. Department of Labor) exceeded its legal authority in implementing the new rule. Consequently, this rule change is on hold for all U.S. employers.

The rule change would double the minimum threshold salary for employees recognized as “white collar” to be exempt from overtime pay – raising it from $455 per week to $913 per week, as we have reported extensively in previous Special Alerts. The court case was brought by 21 states, all challenging the legal validity of this increased salary threshold.

What lies ahead?  The injunction applies until Judge Mazzant issues a full ruling on the validity of the new overtime pay regulations.  Some observers have reported that they believe it is likely that Mazzant will ultimately rule that the new rule is invalid, based on the legal analysis contained in his 20-page order.  Such a decision would be subject to appeal to a higher court by the Obama administration.   But given its lame duck status and the transition to the Trump administration in January of 2017, an appeal by the executive branch seems doubtful.

Employers that have planned to make changes in response to the new overtime pay regulation may thus wait until the rule’s future is decisively determined.  They should remain attentive, however, to legal compliance in other still-applicable areas of overtime rules, such as making sure that the job duties necessary to meet the white-collar exemption are satisfied and that currently non-exempt employees are properly paid overtime.  We will provide updates with more information on this critical topic as it becomes available.

 


 

Sally Wagenmaker is a partner at Wagenmaker & Oberly, a law firm serving nonprofit organizations across the nation with offices in Chicago and Charleston. She provides legal counsel in corporate, tax, employment, and real estate matters for clients including churches and other religious organizations, social service providers, and schools. Sally speaks regularly on nonprofit legal issues and writes through her law firm’s blog (www.wagenmakerlaw.com). 

Mike Batts is the managing partner of Batts Morrison Wales & Lee, a CPA firm dedicated exclusively to helping nonprofit organizations cover their financial bases through professional audit and assurance, tax, and advisory services. Mike has more than 30 years of experience serving nonprofit organizations in a variety of ways. He advises nonprofits on matters related to board governance, financial reporting, tax compliance and strategy, risk management, corporate structure, international activities, and related topics. www.NonprofitCPA.com

The authors would like to express gratitude to Gayla Crain, Esq. of the firm of Gray Reed & McGraw, P.C., for her contribution and assistance in the editing and distribution of this article.

 

The information in this publication is for general information and educational purposes only and does not constitute legal or professional advice of any type.  For legal or professional advice regarding the subject matter of this publication, the services of a competent and appropriately licensed professional should be sought.  In seeking professional services, an organization should take into consideration its own circumstances and geographic location, as federal, state, and local laws vary widely.

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