New Overtime Rules: Legal Update and What You Can Do

Major changes are taking place in federal overtime laws that can greatly affect Michigan’s hospitality industry. These changes take place December 1 and MLTA wants its members to be fully prepared. In this episode, MLTA president and CEO Deanna Richeson talks with Attorney Mike Blum and Kim Hafley, Director of Business Development at Foster, Swift, Collins and Smith PC about the legal implications of these rule changes and their impact on employers.  MLTA members must take steps now to best prepare for the new overtime laws!

Listen to this episode:


Show notes:
What the status of the rule changes?
Current litigation will not stop the final rule. Several states filed an injunction in federal court but it is unlikely that this will be successful. Additionally, the House of Representatives passed a bill to delay implementation of the rule for 6 months, but it is questionable whether the Senate will pass the bill.  Even if it does, the president will veto it if it does clear both chambers.
“Our recommendation is that all employers take steps now so that they will be in compliance with the new requirements when the final rule takes effect on December 1.” - Mike Blum (2:23)
What do employers need to know?

The U.S. Department of Labor will increase the minimum salary to $913/week from $455/week in order to be exempt from the rule.  There is a salary and duties test to determine whether they are exempt. Mike explains some of the changes in the rules in this section.

What happens if you don’t comply?
The Department of Labor has been ramping up in preparation to enforce the new rules. The federal agency responsible for enforcement of these rules has hired at least 220 new investigators and plans to hire more. 
“It is inevitable that once this final rule takes effect, there will be audits by the wage and hour division. So what employers do now will impact the ability to successfully defend all audits for employee filed lawsuits.” - Mike Blum (5:26)
Why work with employment counsel?
Working with counsel now will provide employers with defenses if there are lawsuits. Provisions will help  proactive employers avoid additional liability. Employers who show that they acted in good faith and reasonably believed that they were in compliance with the FLSA can avoid “liquidated damages” (double the amount of damages). Taking steps now can help employers avoid the finding that they violated the act willfully. If willfulness is found, the statue of limitations can be extended from 2 years to 3 years.

“Failure to take steps now and work with counsel to come into compliance potentially could subject employers to not only back wages, but to double damages and an additional year of liability.” - Mike Blum (6:51)
What about small properties?
“There are no reliable small employer exemptions… So I caution any employer to assume they are too small to attract the Department of Labor’s attention. . . “ Mike Blum (7:20)
What’s the potential for class action lawsuits by employees?
Class actions are popular under the current set of rules.  There are currently numerous class action lawsuits pending for misclassification of employees under the current FLSA rules. These changes will likely escalate these kinds of suits.
“I think that the risk of class action is definitely there.  Once this final rule hits, I think attorneys who are already aware of the class action availability for the Fair Labor Standards Act, there are going to be watching very closely after December 1. . .” Mike Blum (8:20)
What do managers need to know?
It is important that supervisors, managers and payroll employees are properly trained on the new rules. Supervisors and managers are on the front line in executing these new changes so they definitely need to know the new rules. Having a training process in place will help protect employers from lawsuits. Many suits going on today have the case where on paper everything looks fine, but in reality, supervisors and mangers are not operating under those guidelines. Proper training for key personnel is critical to protect employers from potential lawsuits.

“Whenever there’s new laws, it’s really important for all the members of the management team to be informed about those employment laws. . .” Kim Hafley (8:55)
Informative, free materials are on the website to help MLTA members prepare for these rule changes. MLTA also will provide a webinar by HR Professional Jodi Schafer for additional assistance. This webinar is provided at a substantially discounted $49 for members on October 26, 2016 at 1 p.m.  There’s only 100 spots available, so please contact the office today for reservations.
MLTA will continue to monitor the progress of this important rule change and keep members informed on how to prepare. Register for MLTA’s education mailing list on to stay up to date on this and other important issues.

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