Employers figuring out the latest twist in new overtime rule: an injunction to halt it

Nov 23, 2016

A U.S. District Court judge in Texas late Tuesday issued a preliminary injunction that blocks — for now — sweeping new overtime rules from going into effect Dec. 1. Those rules were challenged in court by business groups and state governments that claimed they were arbitrary and too costly.

The changes would make millions of workers eligible for overtime, or to get a salary hike — by doubling the salary threshold under which white-collar workers have to be paid overtime when they work more than 40 hours a week. That new threshold is $47,476.  So what does this all mean for businesses and their employees, now that the new rules are on hold?

Leslie Brock runs Donate Life Northwest, a small nonprofit in Portland, Ore., that manages organ donations for the state. She has nine employees, and was ready to reclassify five of them and start paying them overtime. But now?

“We are thinking that we might actually hold off on making some of those status changes,” Brock said. “It does help us save some administrative cost. And it saves the staff who would have been affected having to track all of their hours and make their schedule so that they stay within that 40-hour work week.”

Still, it’s important to point out: this is a preliminary injunction. It can be appealed, the final decision in the case could uphold the new overtime rules and those rules could go into effect on short notice, said Leslie Csonka at the national HR firm Mercer.

She said even if the clock runs out on any Obama administration appeals, many employers have already promised higher pay and better hours to their workers.

“For those that have already started communicating, this will be kind of difficult to reel back, and tell employees they’re not going to be eligible for overtime after all, or that they won’t get a salary increase,” Csonka said.