Pause on Overtime Overhaul Leaves Employers, Workers in Limbo

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Proposed changes to federal overtime rules would have affected millions of salaried workers across the country.

New federal overtime rules set to go into effect on Dec. 1 would’ve made millions of salaried workers across the country newly eligible for time-and-a-half pay. But a judge in Texas issued a nationwide injunction against the rules, throwing the future of expanded overtime into question.

In the state of New York, close to a million salaried workers would've gotten a raise or shorter hours under the new rules, according to Ross Eisenbrey, vice president of the Economic Policy Institute.

"The rule was going to, by Department of Labor's calculation, put an extra $1.2 billion into workers’ wallets next year," said Eisenbrey. Now, those workers have to wait for the courts to act.

Currently, if you're a salaried worker in New York and you make less than $35,000 a year, you're eligible to earn overtime. In New Jersey, that cut-off is lower, at $35,100 a year. The proposed changes would have increased the annual salary maximum to $47,500 nationwide.

In anticipation of the rule change, some employers gave raises to bump employees out of (what they thought would be) the new overtime bracket. Now they're wondering: is it too late to undo this?

Sean Delany, executive director of Lawyers Alliance of New York, which serves non-profits in low-income neighborhoods, said it depends how far they got in the process: if they only announced raises but haven't given them out yet, there's a way to reel them back.

“If they have actually taken steps and conferred salary increases, then they’re in a more delicate situation," said Delany, "because that will disrupt the workforce and perhaps cause some ill will with their employees."

Delaney's advice for employers grappling with the current state of limbo: Don't make any sudden moves until this is settled in court. 

Meanwhile, New York State's Department of Labor is reviewing its own proposed changes to overtime regulations, which would raise the state's salary cut-off by increasing amounts over the next few years. The period for public comment will end on Dec. 3 and, if signed into law by Gov. Andrew Cuomo, the new regulations could go into effect on Dec. 31.