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Judge suspends rule expanding overtime for millions of workers; Rose Law Group employment law attorney David Weissman analyzes the situation

Posted by   /  November 23, 2016  /  No Comments

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By Noam Scheiber | The New York Times

A federal judge in Texas issued a nationwide injunction on Tuesday against an Obama administration regulation expanding by millions the number of workers who would be eligible for time-and-a-half overtime pay.

The regulation was scheduled to take effect on Dec. 1. It would raise the salary limit below which workers automatically qualified for overtime pay to $47,476 from $23,660.

The judge, Amos L. Mazzant III of the Eastern District of Texas, ruled that the Obama administration had exceeded its authority by raising the overtime salary limit so significantly. The ruling was hailed by business groups who argued the new rules would be costly and result in fewer hours for workers.

Continued:

“As recently as several weeks ago, it looked like the new Department of Labor regulation substantially increasing the salary threshold for an employee to be considered exempt from federal overtime pay requirements was a fait accompli. Despite efforts by Congress to pass a bill delaying implementation of the regulation, conventional wisdom was that President Obama would simply veto any such bill, and the new requirement would go into effect as scheduled on December 1.

“Now, with Donald Trump’s election victory and Judge Mazzant’s ruling temporarily (and possibly permanently) preventing the rule from going forward, all of that has changed.  In all likelihood the litigation on this issue will drag out until after the inauguration in January, which means the new president and/or Congress could kill the new regulation altogether.

“While that may sound promising for employers who were not looking forward to raising now-exempt employees’ salaries and/or reducing their hours to control overtime pay, the reality is that the salary threshold for the exemption is likely to be raised regardless, given how long it has been since it was last adjusted (12 years). Still, it is possible that the increase may now be phased in more gradually, as opposed to the dramatic jump from $23,660 to $47,476 that was scheduled to take effect on December 1.

“Overall, then, this appears to be good news for employers. Nonetheless, given the likelihood that at least some increase in the salary threshold is coming at some point, employers are best advised to consult with employment counsel to better understand the potential impact this may have on their business and make adjustments accordingly.

~ David Weissman

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