Overtime threshold increase 'on life support'
- Executive order to double overtime threshold to $47,500 annual salary blocked by federal judge.
- New threshold was to go into effect Dec. 1, and many employers already made changes in preparation.
- York County had given early raises, costing $190,000, to nonunion workers.
A higher threshold for overtime pay was supposed to go into effect nationwide on Thursday, but a federal court ruling and the incoming administration have left serious doubts about whether it will ever be implemented.
President Barack Obama's administration had issued the order in June to double the annual salary threshold at which companies can deny overtime pay. The rule was to increase the salary threshold below which most white-collar, salaried workers are entitled to overtime from the current $455 per week (or $23,660 for a full-year worker) to $913 per week (or $47,476 for a full-year worker).
More than 4 million workers were estimated to become eligible for overtime thanks to the new rule, according to The Associated Press, and companies around the country were preparing for the change by increasing wages or moving salaried employees to hourly workers.
The policy changes were intended to counter erosion in overtime protections, which require employers to pay 1½ times a worker's regular salary for any work past 40 hours a week.
Those new regulations are now on "life support," according to Stock and Leader employment attorney Michael King, after the U.S. District Court in the Eastern District of Texas granted a nationwide preliminary injunction last week preventing the federal Department of Labor from implementing the changes.
The order came after 21 states sued the agency to block the rule before it took effect.
King said he expects Obama's administration to file an appeal, but it's highly unlikely the court would issue a ruling before Jan. 20, 2017, when President-elect Donald Trump takes office.
Trump's administration would then be able to remove that appeal, effectively killing the order, King said.
Local impact: York-based Stock and Leader sent a memo to its clients after the Texas court ruling, advising employers that have been waiting to implement changes that they may keep delaying any changes until a final ruling.
Robert Woods, executive director for the United Way of York County, said his organization was ready to implement changes — which would have only affected five or six employees — but they will now delay implementation.
At the time the rule was originally announced, Woods had said he believed it was fair because the threshold had remained unchanged since 2004.
Obama's administration had included in its rule that the threshold would increase every three years, rising to $51,000 on Jan. 1, 2020, according to AP reports.
Stock and Leader's memo also pointed out that employers who have already announced or implemented changes in anticipation of the Dec. 1 deadline might be in a difficult situation, balancing the right to rescind those changes with employee expectations.
"It's unfortunate this injunction wasn't entered months ago," King said. "It puts a lot of employers in an awkward situation."
County workers: One of those employers who has already implemented changes in anticipation of the deadline was the county.
On Oct. 16, the county moved about 200 nonunion employees from salaried to hourly workers, making them eligible for overtime pay.
County spokesman Mark Walters said the county won't move to reverse those changes, but they will continue to monitor the situation as it moves through the court system.
Estimated costs of paying overtime to those newly eligible workers was included in the county's 2017 budget plan, which is currently available for public comment and is expected to be finalized Dec. 21.
The county's decision to move those nonunion employees to hourly workers was coupled with 3 percent cost-of-living raises for all nonunion employees, which also went into effect Oct. 16.
Such raises are typically imposed at the beginning of the year, but county officials said at the time that the decision to implement those raises earlier was an effort to increase morale for employees who would have to start monitoring their hours more closely.
The raises were expected to cost the county an additional $190,000 in wages from Oct. 16 through the end of the year, officials said.