UPDATE: Overtime Rule—All But Dead?

February 10, 2017

The controversial Overtime Rule created by the Department of Labor under the Obama Administration is facing extinction. On January 24th, the Trump administration indicated it would kill any chance of reviving former President Obama's expansion of federal overtime pay rules, with a court filing suggesting that it may withdraw a White House appeal of a federal court's invalidation of the rule. The 5th U.S. Circuit Court of Appeals granted the Department of Justice a 30-day extension to its motion to file a reply brief in litigation over the rule, giving the administration time to review the case.

 

The new rule, originally scheduled to go into effect on December 1, 2016 was placed on life support when a federal judge in Texas, issued a preliminary injunction stopping the rule from taking effect.

 

As noted in my article from back in the summer, the Overtime Rule would have a dramatic effect on employees and businesses alike. 

 

White-collar salaried workers who make less than $47,476 annually would be required to receive overtime pay when they work more than 40 hours a week. Approved in May 2016, this doubles the current salary of $23,660. Workers who earn more than that would not be required to receive time-and-a-half overtime pay. The minimum salary was scheduled to increase every three years, with the next increase in 2019.
 
Originally, companies nationwide responded in different ways on how to address this potential change. Depending on their own business model and approach, each plan was designed to minimize the impact on the bottom line. Whether the new Rule was specifically intended to force large corporations to compensate for overtime hours for all employers, small business owners would have had a much more difficult time handling the extra workload and costs associated with this change. From a salaried worker’s perspective, depending on one’s perspective, the change could be a windfall in compensation or a limitation on flexible hours such as personal time off for family events (concert, parent-teacher conference, working from home, etc.).
 
For better or worse, whether the business owner or the salaried employee, this new Rule would have changed the landscape—more workload for employee tracking along with increased payroll costs while the employee could experience more pay, work less hours but have less flexibility in juggling their work schedule, limit valued flexibility in negotiating wage and hour agreements, and could have hurt the very low-wage workers that the rule was supposedly intended to help. 

 

While the Trump administration has nearly a month to review the Rule, the consensus is that it is already dead. Whether another version of this rule arises or whether Democrats attempt to revive this bill at the state level remains to be seen but for now, the status quo remains—until the next time government intervention. Stay tuned.
 

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