The Obama Administration is appealing U.S. District Court Judge Mazzant’s November 22 Order that enjoined the implementation of the overtime rule scheduled to take effect today, December 1. Had the rule gone into effect, employers would have been required to pay overtime to most employees making less than $47,476 annually. Currently, employers are required to pay overtime only to employees who make less than $23,660. The overtime rule was expected to impact approximately 4.2 million workers.
The uncertainty surrounding the overtime rule is causing heartburn for many employers. Anticipating the change, some employers already have changed their employees’ compensation (for example, by switching a salaried employee to hourly or raising some employees’ salaries above the $47,476 threshold). Still other employers have revised their overtime policies (for example, by changing when overtime is permitted, how it is to be recorded, and whether prior approval is required). Now those employers have the difficult task of deciding whether to enact those changes or suspend them until the dispute is finally resolved.
In making their decision, employers should be aware that the Department of Labor’s appeal that was noted today may never get off the ground. Generally, it takes months for an appeal to be briefed and heard, and by then, President-Elect Trump and his team will be in office. Mr. Trump campaigned on his opposition to regulations that adversely affect businesses―particularly small businesses. And the business community, anticipating the overtime rule’s adverse economic impact, has loudly opposed it. Accordingly, the Trump Administration might abandon the appeal. The Republican Congress, no longer threatened by President Obama’s veto power, also could try to overturn the rule. Thus, it is likely that the new overtime rule – at least as currently drafted – will never go into effect.