January 13, 2017
The most controversial employment law initiative of the Obama administration was its implementation of new rules governing overtime pay. The new rules were scheduled to go into effect December 1st. They would have the effect of raising the wages of millions of workers by doubling the amount a salaried worker must receive – to over $47,000 a year – in order to be considered exempt from the requirement that workers be paid overtime when they work more than 40 hours in a week.
The administration and labor advocates considered this a long overdue update that would provide a boost to the incomes of lower income “white collar” workers – people like assistant managers and administrative personnel. Some business groups strongly opposed the new rules, claiming they would greatly increase the cost of doing business and lead to layoffs.
Now the implementation of the new rules is in doubt. On November 22nd a federal judge in Texas issued an injunction, blocking the new rules from going into effect as scheduled. Essentially, the judge ruled the the administration did not have the authority to impose the new rules without the approval of Congress.
The Department of Labor will almost certainly appeal this decision, and the issue may ultimately have to be decided by the Supreme Court. There is also some question as to whether President-elect Trump will try to rescind at least some of the new rules. And Congress may act to change some of the new rules as well. So even if the rules survive the current court challenge, their ultimate fate is very much up in the air at this point.