Judge Puts New Overtime Rule on Hold


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Steve Snodgrass

In a last-minute decision, a judge in Texas has put the nationwide overtime rule on hold just days before it was set to go into effect December 1, 2016.

U.S. District Judge Amos Mazzant, of Sherman, Texas, issued a preliminary injunction Tuesday agreeing with 21 states and a coalition of business groups including the U.S. Chamber of Commerce that the rule was unlawful.

The Labor Department issued a statement decrying the decision.

“We strongly disagree with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans,” the department said in the statement. “The department’s overtime rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule.”

The International Franchise Association, on the other hand, has something to be thankful for going into this holiday weekend, as president and CEO Robert Cresanti said in a statement.

“Today’s ruling is a serious and significant victory for the rule of law. While a modest increase in the overtime threshold would have been appropriate, many franchises were faced with difficult and costly decisions about how to reclassify their greatest assets--their employees,” said Cresanti. “Now, franchises are breathing a collective sigh of relief. Franchise owners who had been facing significant costs and questions about the impact the overtime rule was creating for compliance with an unreasonable new threshold and automatic increases.”

The rule that doubled the salary threshold for overtime to $47,476 from $23,660 was certainly going to be under fire from the incoming administration of President-Elect Donald Trump, but the surprise ruling puts implementation in serious doubt.

There is the possibility of an appeal or other regulation, so the rules are still up in the air, but like the initial overtime rule update, it’s one part financial engineering and an equal employee relations quandary.

Businesses that have already announced salary increases, new hour limits or other changes to any of the 4.2 million employees the plan would have covered now have some big decisions to make. Do they roll everything back and say, “nevermind” or do they maintain the changes that eat into the bottom line?

In a time of major labor shortages, that’s an unenviable question to answer.

For a detailed look at the proposed rule and some legal insight, see our previous coverage on the topic. 

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