A New Overtime Rule Has Been Stayed By A Federal Court. What Should Employers Do?

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Under the old regulations, salaried employees who earned more than $35,568 annually were not entitled to overtime pay when they worked more than 40 hours per week. That compensation level was lifted to $43,888 on July 1, and was scheduled to increase again to $58,656 on Jan. 1, 2025. The U.S. Department of Labor estimated that "millions of workers" would be entitled to additional pay .

But that outlook now looks less likely. In November, a Texas federal court found the new overtime rule "exceeds the Department of Labor's authority." Last week the Department appealed the decision , but as of now the overtime rule is suspended.

"We need to continue to monitor the situation," said Tammy Tyler, manager of employment law compliance risk at Paychex , a payroll processing company. "The new administration could withdraw the appeal and — depending on who heads the Department of Labor — possibly undergo rulemaking to draft a new overtime rule."

If you're running a business, this creates a lot of uncertainty. Do you comply with the new rule, even though it's still up in the air? Or do you revert your overtime pay policy?

» READ MORE: Low salary and no overtime: Two Philly-area workers reflect on proposed labor rule change

If you've been waiting for the outcome of this case and the presidential election before making any changes to your overtime pay policy then one option is to continue with the same policy that was in effect before July 1.

But if you've already taken steps to comply with the July 1 increase then you can roll these changes back. However, this means removing potential extra pay from employees, which could create resentment. Walking back a previously announced benefit is never popular.