WMT Walmart Inc

By Ruth Simon and Rachel Emma Silverman 

A Texas judge last month halted an Obama administration rule that would have made millions of Americans newly eligible for overtime pay, but some workers are feeling the effects anyway.

Employers Kroger Co., Wal-Mart Stores Inc. and Wendy's Co. say they are sticking with salary raises and staffing adjustments put in place to comply with the rule, which had been set to go into effect Dec. 1 and made workers earning less than $47,476 eligible for overtime pay.

Companies say they are unwilling to reverse promises they made to raise employee pay, especially after they spent months rearranging job duties and wages. At least one firm said that the approaching rule spurred it to find more efficient ways to use staff, and appears happy with the result.

The moves suggest that some Obama-era workplace policies may persist despite challenges from the incoming Republican administration.

On Nov. 22, federal Judge Amos Mazzant issued an order temporarily halting the rule while he hears a case from business owners who say the Labor Department overstepped its authority in raising the overtime-pay threshold. The department has appealed the order and the court has granted the department's motion to expedite its appeal. It is unclear whether the department would continue with the court case after President-elect Donald Trump takes office in January.

Grocer Kroger, which employs 431,000 workers nationwide, had planned to raise the pay of about 4,500 staffers to comply with new federal overtime rule.

Cincinnati-based Kroger went ahead with its plans, raising pay for some managers and supervisors earlier this month, because the company had already told the affected workers that their pay was going to be raised to the salary threshold, said Mike Schlotman, Kroger's executive vice president and chief financial officer.

"We felt this was a direct violation of our core values to communicate with our associates that this was going to take effect and then not do it because the law changed," says Mr. Schlotman. He declined to say how much the salary increases would cost the company, but said it would affect earnings by "less than a penny per share next quarter."

Brand Value Accelerator LLC plans in January to give 13 of its 59 employees a wage increase or a shift to hourly pay that would put the company in compliance with the overtime rules, even though the regulations are now on hold.

Despite the court ruling, "I would have a slimy feeling going back to them" and undoing the change, said Dylan Whitman, chief executive the San Diego-based e-commerce marketing company.

Many business owners complained about the impending change, but Mr. Whitman said he used the coming rules as an opportunity to look for ways to make his three-year-old company more profitable and better managed. "If my business is running properly and profitably, the amount I have to pay on overtime will not be substantial," he said.

Other small-business owners say that the uncertainty is tougher than the rules themselves.

"The frustrating and expensive aspect of this issue is not knowing what to expect," said Chris Corby, CEO of SFM Facility Management & Maintenance LLC in Nashville, Tenn., in an email.

Mr. Corby held about a half-dozen meetings to prepare for the change and polled clients before deciding how to respond.

SFM, a provider of building maintenance and facility management for churches, private schools and other nonprofits, will stick with the pay raise it gave one employee in anticipation of the new regulation; other planned changes that would have affected seven other workers have been put on hold.

"The whipsaw was so frustrating," Mr. Corby said in an interview.

Some business owners are taking a wait-and-see approach. Matt Agosta, CEO of Steele Rubber Products Inc. in Denver, N.C., moved a half-dozen of his roughly 65 employees to hourly pay in anticipation of the changed overtime rules.

"We will just wait until we finally figure out what [the government] will actually do," said Mr. Agosta, whose company makes rubber parts for classic cars and the street rod market. "There is no sense in upsetting the cart at the moment."

Nikki Waller contributed to this article.

Write to Ruth Simon at ruth.simon@wsj.com and Rachel Emma Silverman at rachel.silverman@wsj.com

(END) Dow Jones Newswires

December 20, 2016 09:14 ET (14:14 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.