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Focus on Taxation: New Overtime Rules Scheduled to Take Effect December 1 Postponed Indefinitely

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On November 22, U.S. District Judge Amos Mazzant indefinitely postponed implementation of the United States Department of Labor (DOL) overtime rules originally set to go into effect on December 1.
November 28, 2016

On November 22, U.S. District Judge Amos Mazzant indefinitely postponed implementation of the Department of Labor (DOL) Fair Labor Standard Act overtime rules originally set to go into effect on December 1. This temporary injunction postpones the implementation of the new rules while the Judge considers a challenge filed by twenty-one states related to the determination of whether an employee is an “exempt” or “non-exempt” employee as defined by the DOL in rules issued earlier this year.

An “exempt” employee is an employee who, under the DOL rules, can be paid on a salaried basis. A “non-exempt” employee must be paid on an hourly basis, and must be paid overtime for any hours worked during a work week that are in excess of 40 hours.  It should be noted that states also have employment laws that may be more stringent than the DOL rules.

The new DOL regulations were set take effect on December 1, 2016. Under these new rules it has been estimated that more than four million employees that are classified as exempt under the current rules will be classified as non-exempt under the new rules and therefore be will need to be paid on an hourly basis, subject to overtime pay rather than be salaried employees.

 

 

Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.

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