Barack Obama's overtime pay rule faces uncertain future under Donald Trump administration

Barack Obama's overtime pay rule faces uncertain future under Donald Trump administration
Source: Getty Images
Source: Getty Images

President Barack Obama's landmark legislation on overtime pay was set to go into effect Dec. 1, which would increase the number of people who qualify for time-and-a-half hourly wages.

Yet 21 states and a coalition of more than 50 businesses are suing the federal government in a conjoined lawsuit that attempts to block the overtime rule. And U.S. federal judge Amos Mazzant of Texas decided Tuesday to issue a preliminary injunction on the new law ahead of its Dec. 1 start date. Mazzant accepted the plaintiffs' argument that not doing so "could cause irreparable harm." The overtime law will subsequently be on hold while the courts examine its legality — a process that will extend into President-elect Donald Trump's tenure.

Businesses anticipated a volatile role out of the new rule: They simultaneously tried to adjust to the new regulation while also expecting it would likely change under a Trump administration.

The Department of Labor's rule more than doubles the threshold income for those who qualify for overtime pay: It used to be that you couldn't qualify unless you earned less than $23,660; now that maximum is $47,476. 

As long as your annual income is less than the threshold, your hourly wage gets bumped up to time-and-a-half whenever you work more than 40 hours per week. 

Within the first year of its implementation, the Department of Labor anticipates the law would benefit more than 4 million workers total. 

While Trump has not explicitly commented on the overtime standards, he has been a critic of regulation, announcing he intends to scrap two pieces of existing regulation for every new one introduced under his government.

A Wal-Mart in New Jersey
Source: Julio Cortez/AP

Furthermore, Republicans on Capitol Hill have actively tried to stop the overtime pay changes, suggesting a Republican-majority Congress could potentially repeal the new law. 

Several companies have started trying to reduce the costs of this new regulation by slightly increasing employees' salaries to above $47,476 — something Wal-Mart has done, for example, to avoid paying overtime — or by switching some employees to hourly instead of full-time employment. 

Carl Howard, CEO of Italian restaurant chain Fazoli, told the Wall Street Journal his company would take "a wait-and-see approach" to the perhaps-tenuous regulation.

Nov. 22, 2016, 8:22 p.m.: This story has been updated.