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Trump administration backs away from overtime hike

The Trump administration revealed today that it will not press for doubling the threshold determining which salaried restaurant employees are eligible for overtime pay when they work more than 40 hours per week.

The step back from a change avidly sought by the Obama administration could save restaurant employers millions of dollars in overtime pay to managers and assistant managers.

As of Dec. 1, 2016, businesses were technically required to pay an overtime rate to anyone earning below $47,476 annually, or $913 per week, when they logged more than 40 hours on the job in any given week. But a federal court issued an enforcement stay before the new rule could take hold, in effect keeping employers on the old standard of $23,660, or $455 per week.

The industry is not off the hook. The U.S. Department of Labor indicated that it still might change the rules to make more salary earners eligible for time-and-a-half pay. “The Department has decided not to advocate for the specific salary level ($913 per week) set in the final rule at this time and intends to undertake further rulemaking to determine what the salary level should be," Labor said in a court filing.

But the industry cheered the administration’s decision not to demand in court that the new standard be adopted immediately.

"It's great to see a Department of Labor finally taking the time to fully evaluate the impact its regulations will have on businesses,” Angelo Amador, executive director of the National Restaurant Association’s Restaurant Law Center, said in a statement. “[Labor] Secretary Acosta has once again proven he is a thoughtful leader who will work in the best interest of the American worker."

The Restaurant Law Center was launched earlier this year by the association to protect and promote the restaurant industry’s interests in courts.

The NRA filed an amicus curiae (“friend of the court”) brief in the lawsuit pending before the U.S. Court of Appeals for the 5th District, which is in Texas.

Still unclear is how today’s events could affect other litigation arising from the Obama administration’s change in the overtime rule. Chipotle was recently sued by managers in New Jersey, who argued that the new overtime rule was technically in effect, and that they should be compensated accordingly.

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