In House - The FindLaw Corporate Counsel Blog

How Businesses Are Adapting to Overtime Rule Uncertainty

Sometimes you just have to laugh about life's twists and turns. Especially since Donald Trump became president and started rolling back Barack Obama's initiatives, like the proposed rule on overtime wages.

The proposed overtime increases are long overdue and now appear to be overdone. That's because the changes were to take effect in December 2016, but a judge granted a preliminary injunction to stop them in November, and then Trump put a freeze on the regulations in January.

Nearly four months after the judge ruled, there is no appealing the injunction and the reality is setting in: overtime increases are not coming anytime soon.

No Appeal, No Deal

The proposed change would have raised the salary threshold for overtime.

Old Rule: If you make under $23,600 annually, you are eligible for overtime.

New Rule: If you make under $47,476, you are eligible for overtime.

The net effect was that employers were compelled to raise the salaries for managers -- and other workers who typically work more than 40 hours a week -- to avoid paying them overtime. Even though the rule never took effect, some employers raised salaries in anticipation that it would become law.

But since the new administration has signaled its opposition to the rule, employers are not so keen on raising salaries. Moreover, economists predict that millions of workers will lose the potential pay boost.

If Employers Don't Have to Pay, They Won't

The Huffington Post reports that millions of workers will lose the chance at overtime and extra family time if Trump deems it.

"If employers don't have to pay for people's time, then they can [use] it without giving a thought to it, and they do," said Ross Eisenbrey, vice president of the Economic Policy Institute, who consulted the Obama administration on the reforms. "They're very profligate with employees' free time."

According to a recent court filing in the overtime case, it is all but over. The outgoing administration lawyers had appealed the trial court's ruling but then asked for more time "to allow incoming leadership personnel adequate time to consider the issues."

The new administration lawyers then sought another extension of time, foreshadowing the likelihood that they will withdraw their appeal of the injunction.

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