Federal Judge Halts National Implementation of Overtime Rule

A federal judge in Texas issued an injunctive order on November 22, 2016, halting the overtime rule nationwide. Judge Amos Mazzant issued a 20-page order preventing the rule from going into effect on December 1. The court wrote the injunction would preserve the status quo while the court considered the merits of the challenge to the overtime rule. The rule would have required employers to pay overtime to most employees who earn less than $47,476 per year and would have gone into effect on December 1, 2016. The current overtime threshold is only $23,660. According to the Obama administration, the rule was intended to jolt stagnant worker wages in the U.S. Several manufacturing and trade groups opposed the rule, claiming it would greatly increase the cost of doing business, especially for small businesses. Employers around the country have been looking at their payrolls to figure out whether to pay overtime to certain salaried employees, move those salaried employees into the hourly camp, or find other methods to satisfy the overtime rule. Those efforts can be set aside --at least for now. 

Litigation regarding the overtime rule is not likely to conclude before Trump takes office. This means President-Elect Trump likely will have the ability to scrap the overtime rule before it ever takes effect. His administration could instruct the attorney general's office to stop defending the rule in the Texas court. During the campaign, Trump expressed his interest in rolling back the overtime rule. He indicated he wanted to see a delay or carve-out for small business owners. 

In sum, the federal judge's ruling out of Texas puts the brakes on the overtime rule and it is unlikely to be revived before January 20, 2017.