Santa Isn’t Coming: Millions of Workers Kiss Anticipated Pay Increases Goodbye

Federal judge puts overtime rule on ice
If you were one of the estimated 4.2 million workers expecting to benefit from the new overtime rule that was supposed to go into effect this month, we have one word for you: sorry.

As you have probably already heard, a federal judge in Texas has put a hold on the implementation of the rule.

While that doesn’t mean the overtime rule is completely dead – the U.S. Department of Labor (DOL) is appealing the ruling – the odds of the law surviving probably aren’t very good.

So what now?

While we can’t offer any definitive answers, we can discuss a few factors that may influence the outcome of this legal battle and what it may mean to you.

Who Is Impacted

First, let’s briefly recap what happened.

The new federal overtime rule was issued by the DOL in response to an executive order by President Obama. However, the rule just got put on ice after several business groups sued to have it blocked, arguing that it would have a negative impact on businesses.

The counterpart to that argument, and the reason the rule was put forth in the first place, is that people who are already working for low wages have been shouldering the burden of an outdated overtime rule for decades now.

Under the current rule, most exempt employees are only eligible for overtime compensation if they make less than $23,660 per year.

For example, a supervisor at a fast-food restaurant who makes $25,000 per year may be required to work more than 40 hours per week at no additional pay, while regular hourly employees at the restaurant receive time-and-a-half for the same number of hours. In this scenario, the supervisor might end up receiving lower hourly compensation than the people who work for him or her.

The new rule would have modified the salary threshold for overtime for exempt employees to $47,476. The rule also contained provisions that would’ve allowed for automatic threshold modifications to account for inflation.

Unfortunately, a federal judge sided with the business groups.

The DOL is appealing, but that appeal is not likely to be heard until February at the earliest.

Of course, by then, we’ll have a new president. If President-elect Trump upholds his campaign promises to undo many of President Obama’s executive orders, the overtime rule is likely to be at the top of the list.

What Happens Now

If the law is scrapped, many workers may never see the long-anticipated pay increases or the reduction in work hours that they were expecting this month.

Some businesses had already begun the process of gradually increasing workers’ pay to ease compliance issues. That is, they bargained that it would be more cost effective to increase some workers’ compensation to get them over the $47,476 salary threshold, rather than pay them time-and-a-half.

So what will happen in those cases? Will employers simply revert those workers back to their previous pay levels?

Unfortunately, that may happen to many people because employers have no legal obligation to keep workers at the increased levels.

What You Can Do

Even without the protection of the new rule, there are some things workers should take into account.

If you’re currently not eligible for overtime, it’s wise to consider whether you’re properly classified as exempt or non-exempt. One way employers have traditionally skirted overtime rules is by “promoting” employees into so-called supervisory or white collar positions and then classifying them as exempt from overtime.

However, it’s important to know that classifications depend on more than just your job title.

Rather, the federal law takes into account the actual responsibilities that the person has. So if you are in a so-called management position but have little actual authority, and do work that is largely similar to hourly employees, you may have been misclassified.

Contact Us for a Free Consultation

If you believe that you’ve been misclassified, or that you’re not receiving your rightfully-earned compensation for another reason, it’s smart to speak to an attorney to find out about your rights.

Email us at murphy@phillyemploymentlawyer.com, or call (267) 273-1054 for a free consultation.