BIG News

Federal Judge Blocks Dec. 1 Overtime Rule From Taking Effect

A federal judge in Texas has blocked a new overtime rule that was supposed to take effect on Dec. 1. That rule would have extended mandatory overtime to another 4 million employees, but many small employers argued that it would cause major harm to their businesses.

Under the current rules, if an employee makes less than $23,660 a year, that person’s employer must pay him or her overtime, even if that person would otherwise be exempt because of his or her job responsibilities. Managers, for example, don’t qualify for overtime.

The Obama administration wanted to increase the overtime threshold to $47,476, more than double what it is now.

But U.S. District Judge Amos Mazzant of Sherman, Texas, issued a nationwide injunction against the rule taking effect. Though the Labor Department could appeal, it’s entirely possible the incoming Trump administration will drop the issue.

“We strongly disagree with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans,” the Labor Department said. “The department’s overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule.”

The overtime increase was opposed by several states and groups like the U.S. Chamber of Commerce.

“We are very pleased that the court agreed with our arguments that the Obama administration’s new overtime rule was unlawful and stopped rule from taking effect on December 1,” said Randy Johnson, the U.S. Chamber’s senior vice president of labor, immigration and employee benefits Randy Johnson.

“If the overtime rule had taken effect, it would have resulted in significant new costs—more than $1 billion according to the Congressional Budget Office—and it would have caused many disruptions in how work gets done. Furthermore, the rule would have reduced workplace flexibility, remote electronic access to work, and opportunities for career advancement. This is a great result.”

What should small employers do next? According to HR expert Karen Hughey …

Employers that have not yet made changes should continue to be prepared for upcoming changes. With future uncertainty, they need to stay alert to further rules changes, then resume their planning at the appropriate time to be in compliance with the revised regulations if and when they do become effective.

Those that already have made changes need to decide whether it makes business sense to keep the changes in place, suspend, alter or reverse those changes pending any subsequent legal developments. Any such decisions should be made in accordance with any applicable state and/or local notice requirements.