Business-Minded Legal Solutions

Implications of new overtime rule for Texas, national businesses

It’s like ping-pong, in a way.

The U.S. Department of Labor (DOL) weighed in on the always volatile and sensitive subject of overtime pay back in 2004, nearly a generation ago. Regulators then established the dollar amount of $23,660 annually as a relevant threshold — most accurately a ceiling — for determining overtime eligibility for select workers.

To wit: Salaried employees making less than that amount were deemed entitled to overtime pay in any week where their labor exceeded 40 hours worked.

That spotlighted amount remained untouched — though often debated — until 2016, when the Obama administration cited years of inflation and doubled it to about $47,000. Neither the joy of workers nor the corresponding worries of many business managers lasted long. A federal court shot down the revision, ruling that the hiked figure was simply too high.

The DOL made a material move in the continuing back-and-forth saga two weeks ago, authoring a return volley marked by a compromise figure of $35,568. Reportedly, that threshold ceiling will expand overtime pay to about 1.3 million salaried workers across the country. The ruling is poised to take effect from the beginning of next year.

Is the move a positive development?

The answer will vary depending on who is being asked the question. Affected workers certainly applaud the ruling.

Conversely, many company principals don’t. A recent Reuters article chronicling the slated change notes that the increased population of workers eligible for overtime will likely expose many enterprises to a heightened litigation risk. Moreover, the added pay exactions could understandably squeeze many businesses, resulting in operational contraction, a cut in workers’ hours and, in some instances, pink slips.

Businesses in Texas and nationally face myriad and constant challenges while seeking to grow their companies and prosper. Business planning is necessarily a constant and exacting endeavor.

Proven commercial attorneys from an established business law firm can help with the process.