For months, Michigan employers have been preparing for sweeping changes announced by the U.S. Department of Labor (DOL) earlier this year regarding how overtime pay is calculated for exempt workers. They were likely all set for the rules to take effect December 1 when a Texas federal judge issued an injunction blocking them from coming into force. The ruling is the result of a lawsuit brought by 21 states, including Michigan, against the DOL over the changes.
The DOL has now appealed, asking the Fifth Circuit to expedite its review of the case, which the court has agreed to do. How the Fifth Circuit will ultimately rule is not yet clear. Another wild card is the incoming Trump administration, which may ultimately act to withdraw the changes, making the court proceedings moot.
All of this leaves Michigan employers in a bit of a quandary: Should they move ahead with implementing the overtime changes or hang back and wait for the courts to sort it out? What if they have already gone through with the changes in advance of the December 1 deadline? Can – or should – they be rolled back? What is an employer’s litigation exposure here?
Response Depends on Status of Implementation
At this point Michigan employers are in one of two camps: Either they were ready to implement the new rules or they were not.
For those that were set to pull the trigger December 1, walking the changes back might be difficult. These employers may have already taken steps to reclassify exempt employees, adjust schedules, and change compensation structures to comply with the new DOL overtime regulations. It’s likely the adjustments have also been announced to affected workers, with some expecting a significant increase in overtime pay. While taking that back might technically be legal since the overtime rules are not yet in effect, this could be very detrimental to employee morale blood pressure medicine lisinopril. Employers will have to weigh this against the potential for cost savings if they do not move ahead with the changes.
This might also be one of the few times when being unprepared is a good thing. Employers that have not fully complied with the new overtime rules could, in theory, now hang back and wait to see how the courts deal with the issue. This includes employers who may have done all the administrative work in advance of Dec. 1 but have not moved forward with implementation or notifying workers. If this is the case, it’s recommended that these employers actively monitor the situation and continue preparations in case the courts uphold the regulations.
No matter which camp a Michigan employer falls into regarding the new overtime rules, all should adopt an attitude of watchful waiting on this evolving issue. With so much uncertainty the best approach is to stay current on developments and then act accordingly.
If you have questions about how you should be preparing for the overtime rule changes – and dealing with the uncertainty – we at Shelton & Deon would be happy to discuss your situation and employment law questions. Please contact us today.