Controversial overtime labor law stopped short of the starting line


Barely more than a week before taking effect, a federal judge blocked the new overtime labor law that would have significantly changed overtime pay.

Back in May, the Wage and Hour Division of the Department of Labor announced the Fair Labor Standards Act, which “guarantees a minimum wage for all hours worked during the workweek and overtime premium pay of not less than one and one-half times the employee’s regular rate of pay for hours worked over 40 in a work week.”

The final rule, which can be found in the Federal Register here, is very intensive. And similar to many other housing regulations, the industry has had to implement, there are a lot of exemptions, details and clauses to be mindful of.

Here are some of the major changes from the rule:

  • The White Collar Exemption salary threshold increased from $455/workweek (or $23,660 for a full-year worker) to $913/workweek (or $47,476 for a full-year worker).
  • The Highly Compensated Employee salary threshold increased from $100,000/annually to $134,004/annually
  • Automatic updates to the salary threshold every three years (first update due Jan. 1, 2020)

It was originally set to take effect on Dec. 1, 2016. However, on Tuesday, U.S. District Judge Amos Mazzant in Sherman, Texas issued a nationwide injunction blocking the Department of Labor’s overtime rule.

While the rule is temporarily suspended until final decisions can be made on the case, Traci Clements, an expert attorney on the new Human Resources laws at Ferguson, Braswell Fraser, said, “It is important that employers continue to prepare to comply with the rule; however, procedurally, the injunction is likely to stay in place until the case is decided.” 

Since the rule never took effect, it’s hard to say the exact impact it would’ve had on the industry, but it had the potential to create drastic change in the way overtime pay worked.

To help put it in perspective and as noted in a previous HousingWire blog, the rule would impact all the extra work employees are putting into beefing up their client retention management systems or understanding Fannie Mae’s new Desktop Under writer Version 10.0.

Nearly half the states fought against the law. According to an article in Bloomberg by Laurel Brubaker Calkins, “The decision Tuesday is a victory for 21 states and dozens of business groups that sued, complaining the new rule would increase government costs in their states by $115 million next year alone and would put private employers on the hook for millions of dollars more, possibly leading to layoffs.”

From the article:

By requiring employers to pay overtime wages based on salary rather than an employee’s duties, the Labor Department exceeded its authority under the Fair Labor Standards Act and ignored Congress’s intent, Mazzant said in his ruling. “If Congress intended the salary requirement to supplant the duties test, then Congress and not the department should make that change,” he said.

National Association of Federal Credit Unions Executive Vice President of Government Affairs and General Counsel Carrie Hunt commented on the news saying, “This is a welcome delay for many small businesses, especially credit unions, that would not have been able to integrate this immense increase without impacting the services they provide.”

“NAFCU and our members believe that this rule would have created major unintended consequences and obstructed growth opportunities for many white collar workers,” said Hunt. “Ultimately, in its current form, this rule could hurt the people it was trying to help.” 

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