The new Overtime rule that businesses have been scrambling to comply with has been put on hold.
On Tuesday, Nov 22, a Texas court ruled that the Obama administration and the Dept. of Labor had overstepped their legal bounds in enacting new Overtime Regulations and ordered the enactment of the regulations be put on hold until further review. The result is a nationwide injunction blocking its implementation.
Upon the Dept of Labor’s announcement of President Obama’s executive order raising the salary cap from $455 to $921 per week, below which all employees must receive overtime pay, 21 states and 50 business organizations sued the Dept. of Labor to stop or delay the implementation of the regulation. The new rule was scheduled to go into effect on Dec 1.
All parties involved in the suit cited that the jump in the wage threshold was too large, and parts of the new regulations lacked the required review period. Thus plaintiffs requested more time to review and adjust. The Texas Court first consolidated all suits into one legal action. Then after hearing arguments, the Court ruled Tuesday that the Labor Dept.’s salary level and automatic updating mechanism lacked statutory authority.
The Obama administration had hoped that enough of a review process was performed and the act would be in place long enough making it difficult for a new President to back track on the executive ordered policy. Now, however, the Court’s injunction is expected to stay in place for the remainder of the Obama administration.
There is speculation as to how the Trump administration will proceed with the regulation upon taking office. Because it was implemented through executive order, the Trump administration could go though the process of rescinding it completely. Others suggest that since the wage cap was last increased in 2004, they may keep the general idea of the regulation in place but increase the wage cap at a lower rate.
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