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Overtime Overhaul: UPDATE

A last minute development has changed the way the entire country is thinking about handling overtime.

In my last blog post, I described how some new rules from the Federal government issued in May were set to take effect on December 1.  A Texas Federal District judge issued an order preventing these rules from taking effect as expected on December 1, 2016.  The order is not the final word, though.  It is simply a temporary halt until a final decision issues on whether the change is legal.

The authority of Congress and the President is limited by the Constitution. In addition,the authority of the Department of Labor is limited by the legislation, such as the Fair Labor Standards Act. Twenty one states and a number of businesses, collectively challenged the rule. One argument is that the change violates the Tenth Amendment. Another argument is that the interpretation of the underlying law, which appears to absolutely exclude certain kinds of employees based on their duties from overtime requirements. Although the agency has authority to describe which duties are included, the Court reasoned that it lacked the authority to broadly categorize duties based on salary level. Finally, the law is indexed to the lowest waged employees in the country, without notice and an opportunity to comment, which is generally required.

The Texas Federal Court agreed that at least one of the arguments may hold water and prevented the rule from going into effect nationwide. Only time will tell if the rule survives judicial scrutiny. Some businesses are moving forward with changes, or have already made them. Other businesses plan to wait and see. You may wish to contact a lawyer to discuss the best course of action for you. Helsper, McCarty and Rasmussen has experience advising businesses on employment law and overtime matters.

Source: The judge’s opinion (PDF hosted by the American Bar Association)