New overtime rules: Will they still take effect on December 1?

On Behalf of | Nov 16, 2016 | Wage & Hour Laws |

For months, employers have been planning for how to respond to new federal rules on eligibility for overtime pay that are due to take effect on December 1.

Under current rules, if you make more than 40 hours per week, your employer might considered you exempt from overtime pay if you make more than $23,660 a year. The Obama administration’s new rule will increase that amount to $47,476 and index it to inflation, with adjustments every three years.

What is the status of this rule, now that Donald Trump has won the White House? The answer affects many middle managers in industries such as hospitality, higher education and nonprofits. In this post, we will update you on what is going on.

Will the new rule still take effect, despite the election results?

The Obama administration has no plans to withdraw the rule. It was the result of a lengthy rule-making process undertaken by the Labor Department. The Trump administration would reverse that process, but it could take months or even years to do so.

There are, however, two other scenarios that could result in rollback of the new overtime rule. The new Congress could pass legislation to limit or overturn it. Or the courts could roll back the rule by finding in favor of states or business groups that have filed legal challenges.

What are the prospects for legislation?

One possibility is that Congress could pass a compromise bill that phases in the increased income thresholds for overtime pay over several years.

Congress could also choose to change the “autoescalator” provision of the new rule. In other words, Congress could specify that automatic upward adjustments every three years based on inflation either don’t occur at all or are more limited in scope.

Another possibility is that Congress could create an exception for small businesses to the new overtime requirements.

How the Trump administration and Congress approach the OT question will be a revealing litmus test of how the working-class concerns of many of Trump’s core supporters fit with the normally pro-business orientation of Republican administrations.

What about court challenges?

Numerous business groups and 21 Republican state attorneys general opposed to the new overtime rule have joined forces to bring suit against the Labor Department.

The suit seeks a preliminary injunction against the new rule going into effect. On November 16, a judge in Sherman, Texas, will hear oral arguments in the case.

It is unlikely that the lawsuit will stop the new overtime rule entirely. But that is certainly possible, especially considering the election results. A more likely scenario is that the courts could limit the impact of the rule by striking down the automatic increases in income thresholds based on inflation that would otherwise apply every three years.

What can you do, as an employee, to make sure your rights are protected?

With so much uncertainty about the new overtime rules, it is very important that you stay informed about what your rights are. If you believe you have been wrongly denied overtime, an attorney who is knowledgeable about employment law can explain your legal options.


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