FEDS TO APPEAL JUDGE’S RULING ON OVERTIME PAY
Uncertainty on overtime rules deepens, with Obama digging in
New rules to exempt supervisory workers from overtime pay and other requirements starting at $47,476 per year rather than the current $23,660 per year were supposed to kick in Thursday. But last week, a federal judge in Texas unexpectedly blocked implementation of the new rules.
The Obama administration plans to fight until the buzzer sounds to lift the threshold on who is eligible for overtime pay and other protections, adding to the drama faced by employers and salaried workers alike.
New rules to exempt supervisory workers from overtime pay and other requirements starting at $47,476 a year rather than the current $23,660 a year were supposed to kick in Thursday.
But last week, a federal judge in Texas unexpectedly blocked implementation of the new rules. On Thursday, the U.S. Department of Labor gave notice it would appeal that ruling rather than let time run out on one of its top priorities.
“It is in a state of limbo and we don’t know whether it will go into effect or not. There are varying theories on it,” said Ben Hase, an attorney with the Mountain States Employers Council in Denver earlier this week.
An estimated 4 million U.S. workers, including 70,000 in Colorado, could become eligible for overtime pay under the higher threshold.
Supporters argue only 7 percent of fulltime salaried workers now have overtime pay protection, versus 62 percent back in 1975. That has left a door open for some employers to hire “managers” at a low salary and work them 60 or 70 hours a week, resulting in them earning less than minimum wage.
But opponents counter that more than doubling the pay threshold in one fell swoop would be disruptive to business and would greatly reduce the flexibility of employers and could result in lower pay for many workers.
Many employers assumed the higher pay requirement for salaried workers would be adopted and planned accordingly. They raised the pay of some employees to get them over the new threshold or converted other workers to hourly pay and trimmed their schedules to avoid overtime.
“Some people who procrastinated are super-relieved,” said Sonia Riggs, president and CEO of the Colorado Restaurant Association.
Many employers will likely follow through on any changes, but some may back track or try to return to the status quo if the court throws the changes out or the incoming Trump administration abandons the fight for the new rules.
“I have also heard some folks say we are putting employees back (to salary) or giving them a different incentive,” she said.
Complicating the calculation in Colorado is a 99 cent an hour increase in the state minimum wage coming in January, Riggs said.
“There will be a lot of discussions in organizations. There is a lot of uncertainty,” said Renny Fagan, president and CEO of the Colorado Nonprofit Association.
If employers decide to back track or undo any changes, they need to tread carefully, Hase warned.
“We are essentially saying if you made the change already, it may not be a great idea to change it back, not just for morale purposes, but there may be some legal promises there,” he said, adding it all depends on how things were presented.