The Obama administration’s new overtime rule, originally set to take effect on December 1, 2016, has hit a roadblock in court. A federal judge issued an injunction, thereby stalling President Obama’s attempted overtime reform that would have impacted 4.2 million workers in the US.
The original rule would have allowed employees to earn overtime if they make under $47,476 a year, more than double the previous threshold of $23,660 a year.
Under the existing regulations, only seven percent of salaried workers are eligible for overtime pay, compared to 62 percent of workers in 1975. The new rule would have increased that figure to 35 percent.
Reaction to this rule has been decidedly mixed since it was announced in May 2016. Labor groups applauded this move as a major victory, citing the fact that overtime regulations had not been updated in over a decade. Employees who put in long hours without overtime could actually be making less than minimum wage when all hours worked are factored in. On the other hand, some small business owners have criticized the new measure, saying they may have to switch some salaried workers to hourly positions to afford the new threshold. For workers, this could mean fewer hours instead of bigger paychecks.
With President-elect Donald Trump set to take office on January 20, 2017, this rule was already in jeopardy.
The Department of Labor estimates 4.2 million additional workers would have been eligible for overtime pay under the rule (see map above), and it has updated its website to reflect the recent news:
“The Department strongly disagrees with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans. The Department’s Overtime Final Rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options.”
The Department of Labor said it is confident it was within its legal power when it made the changes.