Law In Limbo: Judge Halts Overtime Rule, Fate Uncertain

The new overtime rule, just days away from going into effect, was temporarily blocked by a Texas judge last week. The ruling, in concert with the upcoming change in the Oval Office, makes the rule’s fate murkier than ever.

Employers are now faced with a dilemma: do they move forward with changes they’d already implemented to comply with the rule? Or do they take a wait-and-see approach?

Details on the ruling, from the Wall Street Journal:

On Tuesday, Judge Amos Mazzant in Texas ruled in favor of the challengers, writing in an order that in setting the automatic salary increases, “the department exceeds its delegated authority and ignores Congress’s intent.”


The preliminary injunction essentially halts the implementation of a rule that would have required employers to start paying overtime to workers earning salaries of less than $47,476 a year, making millions more workers eligible for time-and-a-half pay.

Nearly two dozen states and a coalition of business groups filed two separate lawsuits to overturn the regulation, alleging that the government had overstepped its authority, including by stipulating that the $47,476 salary threshold would automatically increase every three years. The complaints were consolidated into a single case.

NPR talked to a CPA in Ohio about what he’s telling clients about how to move forward in the wake of the injunction. From NPR:

Well, first off, it’s a temporary halt. Plus, I’d like to point out that the law was not approved by Congress. It was enacted through an executive order by President Obama. And we have been under the belief that there will probably be some type of changes with a new administration since it was not congressionally approved.


I mean, we’re telling [clients], you need to now have time sheets for employees. You need to not just write eight hours each day. You need to record the time that they came in, the time that they went to lunch, the time they came back from lunch.

And we have told them some options. You know, if your employee is close to making the 47,500, you can give them a pay increase. You can do what our firm has done and put everybody on an hourly rate. If they are working 60 hours a week regularly on salary, their hourly rate just has to be above the federal minimum wage.


Video courtesy of PBS Newshour

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