Reversal of Overtime Rules

After organizations have been gearing up for months to implement the new overtime rules by December 1st, a federal judge in Texas has put a nationwide block on the regulation.   Last week, U.S. District Judge Amos L. Mazzant, III issued a preliminary injunction stopping the new overtime salary limit less than two weeks before its intended enactment.  As this law was set to affect both governmental and private sector employees Kansas joined 20 other states in filing a lawsuit against the US Department of Labor in September.  The states’ suit is based on the legislation committing “an ever-increasing amount of State funds to [pay] State employees salaries or overtime … [which could] unilaterally deplete State resources,” per the complaint. 

Small businesses have rallied behind the National Retail Federation and National Federation of Independent Business, which have also filed suit against the increased salary threshold and, potentially, salary and overtime expense. 

Given that President-Elect Donald Trump has called the legislation “over-regulation,” it is possible that the salary thresholds for overtime pay that were set to go into effect on December 1st, may never see the light of day, at least not in their current form. 

The injunction leaves many employers in limbo, as many employers had already made preparations to implement the overtime rules by the quickly approaching original deadline.  Now, with the blocked regulations, employers have some decisions to make.  If an employer has already reclassified employees and increased salaries to meet the expected change, the employer may prefer to keep those plans in place.  However, if an employer has not yet to reclassified employees, the employer can postpone that decision while closely watching the developments as we move towards a new US Congress and president for 2017. 

Check our blog for updates as they become available.