Photograph by Pete Souza from Washington, DC (The President was listening intently during a meeting in the Oval Office with his senior advisors), via Wikimedia Commons.
President Obama, together with the Department of Labor (“DOL”), worked hard to put policies in place that give middle to low income families the ability to bring home more money. On March 23, 2014, President Obama issued a memorandum, the overtime rule, calling for the DOL to “modernize and streamline the existing overtime regulations for executive, administrative, and professional employees.”[1] The President also stated, “regulations regarding . . . overtime requirements . . . for executive, administrative, and professional employees . . . have not kept up with our modern economy.”[2] The overtime rule was the vehicle Obama and the DOL planned to use to drive the changes they hoped to see. However, just a few days before the rule’s December 1st enforcement date, Judge Amos L. Mazzant, III, of the U.S. District Court for the Eastern District of Texas, Sherman Division, threw a curve ball at the DOL and employers across the country by granting an emergency preliminary injunction. [3] This injunction resulted in an indefinite hold on the overtime rule.[4] Judge Mazzant’s decision also means that the DOL has to continue fighting for the rule in the face of the “State Plaintiffs,” a party comprised of over 20 states, armed with a ruling that grants all remaining states standing to file suit against its enforcement.[5]
If passed, the overtime rule would allow salaried employees who meet certain eligibility requirements and have an income under $47,476 per year, which is an increase from the current $23,660, to become eligible to receive overtime pay for working more than 40 hours per week.[6] This change is expected to make 4.2 million workers eligible for overtime pay.[7] With so many eligible employees would come crucial operational decisions for each of their respective employers. Moreover, with a December 1st enforcement date, many employers already made the changes necessary to ensure compliance.[8] They adjusted employee schedules, job duties, and even pay.[9]
Prior to the injunction, companies such as Walmart had already announced that starting December 1, 2016, its entry-level managers would receive an annual increase in pay from $45,00 to $48,500 per year, a change made in efforts to avoid having to pay their workers overtime.[10] Are these companies now supposed to take their promise back due to Judge Mazzant’s decision? Employers that did not implement changes have been stuck between planning for change or maintaining the status quo. This problem is still a reality in Kansas where the Kansas Department for Children and Families and the Kansas Department of Corrections are unable to increase salaries to comply with the overtime rule because their resources are devoted to other critical, public safety-related functions.[11] Were the companies that have not yet made changes to comply with the overtime rule supposed to cut funding from crucial functions to meet this rule? How long will they be waiting in the dark?
The DOL has to try and make this happen in the midst of a Presidential transition of power involving a less than predictable incoming administration. Will President-elect Trump continue to chip away at President Obama’s legacy or will he too attempt to use the overtime rule as a vehicle to bring financial prosperity to the lower and middle classes, a promise he made various times along the campaign trail?[12] With inauguration day quickly approaching, President Obama and the DOL surely have their work cut out for them. As of now, if there is one thing the overtime rule has created for employees and employers alike its massive amounts of confusion and uncertainty.
[1] Nev. v. U.S. Dep’t of Lab., No. 4:16-CV-00731 1, 3 (Tex. D. Ct. 2016).
[2] Id.
[3] See id at 19.
[4] See id.
[5] See id.
[6] See Important Information Regarding Recent Overtime Litigation in the U.S. District Court of Eastern District of Texas, Department of Labor, https://www.dol.gov/featured/overtime.
[7] Id.
[8] See Dave Jamieson, Walmart Wants to Avoid Paying Overtime. That’s Actually a Good Thing, The Huffington Post, (Oct. 12, 2016, 4:43pm), https://www.huffingtonpost.com/entry/walmart-overtime-pay_us_57fe91c9e4b0162c0439935d.
[9] See Melanie Trottman and Ruth Simon, Court Halts Overtime Rule, Leaving Employers in Limbo, The Wall Street Journal, (Nov. 22, 2016, 9:31pm), https://www.wsj.com/articles/overtime-pay-rule-to-go-into-effect-but-may-not-last-1479810612.
[10] See Jamieson, supra note 6.
[11] See Nev. v. U.S. Dep’t of Lab., No. 4:16-CV-00731 1, 15 (Tex. D. Ct. 2016).
[12] See Dave Jamieson, President Obama Expanded Overtime Pay For Millions Of Workers. President Trump Could Take It Away, The Huffington Post, (Nov. 11, 2016, 5:31pm), https://www.huffingtonpost.com/entry/obama-expanded-overtime-pay-for-millions-of-workers-trump-could-take-it-away_us_58334ba0e4b058ce7aac5ee5.
