Many salaried employees hoped to receive overtime pay as issued by President Obama to the Secretary of Labor in an executive order. The president’s goal was to update the overtime regulations by increasing the salary limits, keeping the overtime law current with inflation. In 1975, the salary limits ensured that 62 percent of full-time salaried workers were covered. By comparison, today’s limits only cover 7 percent of salaried workers.
This updated rule would have taken effect on Dec. 1 and would have required the salary minimum for certain overtime exemptions to jump from $455 to $913 per week, a change that would have affected more than 4 million Americans. However, a week ago, a U.S. district judge in Texas issued a preliminary injunction in the case, blocking the implementation of President Obama’s order. Writing for the court, Judge Amos Mazzant III ruled that the Department of Labor “exceeds its delegated authority and ignores Congress’s intent.”
The temporary injunction prevents the new rule from expanding overtime coverage to salaried employees earning between $23,660 and $47,476 per year. The increased salary minimum applies to administrative, executive, and professional employees, often called the “white collar exemptions.”
Will this order be overturned once President-elect Trump takes office? It’s likely there will be a change under his new administration as this executive order was not popular among pro-business conservatives. It is probable that Trump will side with the courts and withdraw the order, which could offer relief to some in the business community.
If the rule is implemented, business owners could face difficult decisions, such as reducing employee hours, increasing salaries to avoid overtime compensation, or feeling the need to let go of staff to avoid paying millions in additional salaries. For now, the future of increased overtime pay is uncertain.
Robert Harris, Harris Law Firm