For the last six months, Durango business have been getting ready for federally mandated changes in overtime pay, but on Tuesday, a Texas judge blocked it just days before it was set to take effect on Dec. 1.
It is unknown how long the injunction will last or if the law will ever take effect.
But many businesses have already made changes in compliance with the law, said Eric Malone, president of The Payroll Department.
“We’ll just monitor it,” Malone said. Malone’s company has 750 clients in the area and guides some on how to stay in compliance with labor laws.
The federal court in the Eastern District of Texas prevented the Department of Labor from mandating overtime pay for white-collar salaried managers who make less than $47,476 per year to be paid overtime. The existing salary cap of about $23,600 will stay in place for now.
The court agreed with the rule’s opponents that the Labor Department overstepped the authority it has from Congress and that the rule could cause irreparable harm if it took effect Dec. 1 as scheduled. The department is now considering its legal options, but the future of the law is unclear because President-elect Donald Trump will be in charge of the department after taking office on Jan. 20.
To prepare for the overtime rule, in many cases Durango businesses changed salaried positions to hourly, Malone said. Reclassifying positions from salaried to hourly allowed employers to keep the wages the same for those positions, as long as the employees do not work more than 40 hours a week.
In some cases, making these changes brought businesses in compliance with existing laws, as well, he said.
The labor law outlines specific duties salaried employees must be doing and the proposed increase in the salary cap caused many businesses to re-examine those roles, said Jessie Christiansen, with The Payroll Department.
For example, to qualify for the executive exemption the salaried manager must be able to hire and fire employees and oversee them.
For other administrative positions, it made sense for businesses to give or consider raises because their salary was fairly close to the new cap, Malone said.
The new rule would have applied to about 73,000 managers in Colorado, according to a White House estimate.
Now many local businesses are preparing for the increase in Colorado minimum wage from $8.31 to $9 set to take affect in January. Voters approved a phased increase in the minimum wage, which will be $12 by 2020.
This change may have an even greater impact in Durango than the overtime changes would have, Malone said.
“I think the businesses who have a lot of minimum wage workers, it’s a challenge for them,” Malone said.
mshinn@durangoherald.com. The Associated Press contributed to this article.
