A federal court is blocking implementation of a regulation that would make an estimated four million higher-earning workers eligible for overtime pay. The order comes after 21 states sued to block the rule before it takes effect December 1st.
A nationwide preliminary injunction was granted Tuesday that prevents the Department of Labor from implementing changes to the Fair Labor Standards Act. The regulation would shrink the ``white collar exemption'' and more than double the salary threshold under which employers must pay overtime to their workers.
Buffalo attorney Amy Hemmenway says the injunction puts employers in a tough spot, especially if they've already told an employee that they'll be getting a salary increase.
"They certainly don't want to destroy employee morale, but there some tough decisions that may need to be made," Hemmenway said.
"In particular, employers need to be aware that if this rule is ultimately found to be lawful, there is a possibility that it could be applied retroactive to December 1st and, therefore, they want to take that into consideration and make sure they are taking steps to be in compliance."
And while the federal rule is blocked, Hemmenway points out that the State Labor Department recently proposed its own changes to the overtime rule to take effect at the end of the year.
"It's unknown whether this ruling will somehow cause New York to revisit its proposal. That's something we'll have to wait and keep an eye on," Hemmenway said.
The proposed change to the state's overtime threshold has largely gone unnoticed because it is lower than the federal threshold.