A federal judge has halted the new FLSA regulations, including raising the salary threshold for exemption from $23,660 to $47,476, which were slated to go live on December 1, 2016. The injunction was granted just 10 days before the regulations were to go into effect, meaning many organizations had already conducted a good deal of preparatory work and even made changes to employee compensation in anticipation of the updated regulations. The injunction means that the existing regulations will remain effective for the time being.
Professional human resources associations are unsure of what will become of the proposed FLSA regulations. When the new federal administration takes office in January 2017, it is likely that the changes would not go into effect, at least not in their proposed form. However, organizations need to stay abreast of the current situation since an appeal could put the new regulations into effect before the federal transition.
Given the last-minute nature of the injunction, transparent communication to any affected employees is critical. Our experience suggests that many organizations are choosing not to roll back pay increases that were proactively granted to employees in order to reach the higher salary threshold for exemption.
Keating Advisors believes that regardless of what may happen with the exemption regulations in the future, it is best practice for organizations to regularly review job duties and classifications to ensure compliance with all applicable regulations. Beyond compliance, regularly reviewing jobs, pay, and internal equity is essential to maintain a fair and market-competitive compensation system.