A federal judge has blocked an Obama administration rule that would extend mandatory overtime pay for over 4 million salaried workers. On November 22, U.S. District Judge Amos Mazzant in Texas, appointed by President Obama in 2014, declared the rule unlawful, thereby granting 21 states as well as an alliance of concerned business groups, including the U.S. Chamber of Commerce, their motion for a nationwide injunction.
On December 1, the Obama administration filed a notice of appeal in the U.S. Court of Appeals for the Fifth Circuit in New Orleans. It was filed by Secretary of Labor Thomas Peretz and representatives of the U.S. Department of Labor.
Issued by the Labor Department in May, the overtime pay rule, to have taken effect on December 1, would have doubled the maximum salary an employee can earn, from $23,660 to $47,476, and still be eligible for mandatory overtime pay.
The 21 states and business groups filed lawsuits in September, claiming that the increase in salary was arbitrary. The rule would have affected virtually every industry, particularly nonprofits, retail stores, hotels and restaurants, where many managers’ pay is below the new salary threshold.
This week, Mazzant ruled that the Fair Labor Standards Act (FLSA), the federal law that addresses overtime, does not allow the Labor Department to determine which workers are eligible for overtime pay based on salary alone. The FLSA states that employees can be exempt from overtime if they undertake executive, administrative or professional responsibilities, but Mazzant wrote in his 20-page ruling that the Obama administration’s recent rule “creates essentially a de facto salary-only test.”
When the administration first announced the new rule six months ago, the U.S. Chamber of Commerce and the National Retail Federation immediately expressed disapproval, stating that businesses would not be able to afford the increased costs and time regulation associated with the change.
The Labor Department has stated that it disagrees with Mazzant’s ruling and will continue to explore other avenues to have the overtime rule passed. One possible option is an appeal to the New Orleans-based 5th U.S. Circuit Court of Appeals, though that same court blocked the administration’s executive actions on immigration last year.
In a statement after Mazzant’s decision, Ross Eisenbrey of the Economic Policy Institute, a supporter of the rule, called the judgment “extreme and unsupportable,” adding that it’s “a disappointment to millions of workers who are forced to work long hours with no extra compensation, and is a blow to those Americans who care deeply about raising wages and lessening inequality.”
The future of the overtime rule remains to be seen in light of the recent presidential election results. In August, President-elect Donald Trump told Circa News from the campaign trail in Florida that it was an example of onerous business regulations that he would attempt to reduce as president. “Rolling back the overtime regulation is just one example of the many regulations that need to be addressed…We would love to see a delay or a carve-out of sorts for our small business owners.”