Overtime Rule Change Temporarily Halted—Now What?

We blogged recently about dramatic changes to payroll accounting with new overtime rules scheduled to take effect Dec. 1, but a Texas judge stopped the clock—at least temporarily—to consider the merits of a suit challenging the rule changes.Interestingly, businesses weren’t the only entities challenged by the doubling of the pay threshold to be exempt from receiving overtime compensation; state and local governments as well as some nonprofits were also stressed financially by the changes. Twenty-one states and multiple organizations brought the suit that convinced the judge to issue a temporary injunction.Payroll experts agree this development adds significant confusion to the issue and most recommend one of three options:

• If you already implemented a plan to be in compliance with the new rule, keep it in place till final decisions are made, either in court or by the Department of Labor (DOL);
• If you developed a plan but didn’t execute it yet, keep it handy, but don’t proceed;
• Partially implement some of the changes to start the process, though some labor lawyers warn doing so could be risky: disgruntled employees could bring charges of unfair practices or discrimination.

If you haven’t developed a plan to comply yet, you’ve got some more time. You should get one ready as any final implementation, if it’s upheld, could happen quickly after the court issues a final ruling.Note, too, the definitions of who qualifies (by status of position: supervisor, professional or administrator) didn’t change in the rule modifications, but these positions’ minimum salaries did.While President-Elect Trump said during the campaign he wanted an exemption to the new rule for small businesses, and many businesspeople are expecting a more business-friendly environment, no guarantees exist until the court case(s) concludes and final implementation guidelines are published by DOL.Of course, as with your tax planning and records, our advice is: document everything you decide and do. We expect you’ll soon see ads from eager attorneys encouraging overtime lawsuits—some already started advertising—and your full documentation of how you acted and why will go a long way towards mitigating any claims.Our Patrick & Robinson CPAs team of professionals is here for your payroll, bookkeeping and tax accounting questions. Contact us at Office@CPAsite.com or (904) 396-5400.