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Federal overtime rule invalidated

The U.S. Justice Department has said it will not appeal a court decision that the federal government overreached its authority when it increased the salary threshold that would require employees to be paid overtime.

As a result, the rule has been invalidated, and the annual salary threshold of $23,660 remains the same.

Employers are astutely aware that many workers are entitled to overtime pay for hours worked over 40 hours. However, businesses may exempt workers from the requirement, if their duties are managerial in nature and if they reach a certain salary threshold.

Last year, the U.S. Department of Labor (DOL) attempted to increase the standard salary threshold to $47,476. After the proposed change was challenged, the court ruled that this was an overreach.

Greater Cleveland Partnership members—particularly smaller businesses—were concerned about the proposed rule, since it would have doubled the threshold under which employees must be paid overtime.

This would have negatively impacted employers with the potential for increased compliance costs. In addition, the rule could have forced some businesses to reduce employee hours.

Public comments on the subject will continue to be accepted by the DOL through September 25, 2017.