Update on Overtime Rules

Update on Overtime Rules by Alan Krystal

{2:30 minutes to read} In a recent two-part article, I discussed the upcoming changes that will go into effect December 1, 2016, with respect to overtime eligibility and exemptions and the significance of those changes.

In recent weeks, there have been two events—one at the courthouse, the other at the ballot box—that could potentially have a major effect on these changes.

On September 20, 2016, the U.S. Chamber of Commerce, along with more than 50 business groups, filed a lawsuit in the US District Court, Eastern District of Texas challenging the overtime rule. They also argue that the Department of Labor (DOL) exceeded its statutory authority in issuing the regulation and violated the Administrative Procedure Act (APA).

At the same time, 21 states filed suit in the same court challenging the overtime rule. They allege the Department of Labor unconstitutionally overstepped its authority to establish a federal minimum salary level for white-collar workers.

The lawsuits further allege that the overtime rules infringe on state sovereignty by dictating what wages states must pay to its employees, allowing the DOL to overstep its authority without Congressional authorization. The new salary threshold was set so high that it “disqualifies millions of bona fide executive, administrative, and professional employees from the exempt status.

Another significant change occurred on November 8, 2016, with the election of Donald J. Trump as the nation’s 45th president. He will govern, at least through 2018, with Republican majorities in the Senate and House of Representatives and therefore undo or modify changes implemented by the Obama Administration.

A new presidential administration can result in a number of changes in the new law, including legislation blocking the rule [i] or phasing the rule in over a period of years, and/or eliminating the upwards salary adjustment that is to occur every three years. [ii]

As employers adjust to the new realities of the overtime rules, it is possible that these realities may again be changed. Therefore, what occurs within the Texas District Court, the Trump Administration and a new Senate and Congress bears watching.

(As of press time a Texas Court has issued a nationwide injunction blocking the overtime rules scheduled to take effect on December 1, 2016) [iii]


[i] Killing the Overtime Rule

[ii] Trump Expected to Seek Deep Cuts in Business Regulations

[iii] Texas Judge issues Nationwide Injunction Against Obama’s Overtime Rule


Alan Krystal


Alan Krystal

Alan H. Krystal, P.C.
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