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Businesses react to changes in OT rules

Businesses react to changes in OT rules

The fate of a change to a federal overtime law remains in limbo after a judge filed an injunction, but members of the local business community say it may not matter much at this point.

The Department of Labor previously proposed new rules that would have gone into effect on Dec. 1, and required employers to pay overtime — 1.5 times the regular salary for time worked beyond 40 hours per week — to anyone making less than $47,476 annually. The threshold to require overtime currently is $23,660.

However, the change was put on hold in late November after a federal judge in Texas filed a preliminary injunction, blocking the law just days before it was set to go into effect. The timing has created a headache for employers, some of whom had already made changes as if the law was going to be a reality.

“The ruling with the injunction was so close to the actual implementation that most places I’ve spoken to had already made decisions and met with staff,” said Mark Eagan, CEO of the Capital Region Chamber of Commerce. “Most just continued like it was law.”

There were two common solutions Eagan said he heard about leading up to the Dec. 1 deadline:

One scenario involved employers telling workers earning less than $47,476 that they needed to seek approval before working more than 40 hours per week. In the other, employers gave salary increases to employees to put them closer to or over the $47,476 threshold.

By the time the injunction was filed, most companies had chosen their strategy and were unlikely to reverse it, Eagan said.

“Given it was so close, I think most companies who were on top of the law had already made a decision on how they were going to respond,” he said.

John Bagyi, a labor attorney who represents employers for Bond, Schoeneck & King in Albany, also said that most businesses that put changes in place are likely to leave them in place despite the injunction.

The Department of Labor has requested an expedited briefing schedule, meaning the Obama administration’s appeal of the injunction will be done by the end of January. However, President Obama will have left office before the situation is resolved, Bagyi said.

Andy Puzder, whom Donald Trump has nominated for Secretary of Labor, has made his opposition to the change in overtime rules clear.

“Obama’s goal that these would go into effect before he leaves office just isn’t going to happen,” Bagyi said. “What happens when Trump takes office is anybody’s guess.
Bagyi said the president-elect could choose to withdraw the appeal against the injunction, which would keep the changes blocked.

Regardless of what happens at the federal level, Bagyi said, the state already has a higher threshold for workers who require overtime, and it may get higher still.

The state Department of Labor earlier this year proposed an incremental increase in New York’s threshold that, if finalized, could go into effect statewide at the start of 2017, Bagyi said.

In upstate counties, those making less than $675 per week qualify for overtime. That threshold will jump to $727.50 after Dec. 31.

That change, like the proposed federal adjustment, has been opposed by groups like the Business Council of New York State, which is the state’s largest statewide employer association. The council submitted a letter earlier this month to the state Department of Labor, laying out concerns with the planned increase.

The letter points out that many businesses are already dealing with the state’s proposed minimum wage increases, a pending paid family leave mandate and other rising costs, making the overtime regulation harder to tolerate.

“The impact on New York employers of the new exempt salary levels will only add to the cumulative negative effect of the new minimum wage,” wrote Ken Pokalsky, vice president of the business council.

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