Obama Overtime Rule in Danger
By Andrew Soergel
President Barack Obama’s final push for a more progressive private sector before he cedes his office to Donald Trump looks to be in danger of being permanently scuttled, with a federal judge stalling the administration’s efforts to raise overtime pay for millions of Americans.
Judge Amos L. Mazzant III of the Eastern District of Texas issued a temporary nationwide injunction against the Department of Labor’s upcoming overtime revamp Tuesday, deeming the policy an overreach of executive power.
The overtime rule, announced earlier this year and scheduled to go into effect Dec. 1, would have roughly doubled the salary threshold below which employers are required to grant workers overtime pay for working more than 40 hours in a week. The move would have opened overtime to full-time salaried employees making a little more than $47,000 annually.
“A single judge in Texas has ignored 78 years of legal precedent and taken money out of the pockets of millions of working people across the country by blocking the long overdue update of the overtime rule,” Emily Martin, vice president for workplace justice at the National Women’s Law Center, said in a statement Wednesday. “These workers, the majority of whom are women, earn modest salaries, work long hours, and have just been told that they will still be denied fair pay.”
Currently, mandatory overtime is enforced for salaried workers making a little less than $24,000 each year. The government has previously estimated the move would expand overtime availability to more than 4 million workers.
But the rule’s status is now in question.
“We strongly disagree with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans,” the Department of Labor said in a statement, hinting at a possible appeal. “We are currently considering all of our legal options.”
Proponents of the rule have argued that it would provide a needed pay boost for lower- and middle-class workers, but the measure was not without controversy. The U.S. Chamber of Commerce, which actively fought against the policy’s implementation, argued that its adoption would “substantially increase the labor costs of … nonprofit employers and state and local governments.”
Small-business owners, likewise, weren’t entirely on board, as they’d likely shell out more money to pay existing workers and potentially reclassify salaried workers to hourly.
“The injunction against the overtime rule protects small businesses and their employees from another unworkable Washington mandate,” Alfredo Ortiz, president and CEO of business advocacy group the Job Creators Network. “This rule would have forced small businesses to reclassify their valued salaried employees as hourly ones in order to track hours worked and not incur overtime labor costs.”
The fact that the Department of Labor planned to enact this overtime overhaul without going through Congress also didn’t sit well, especially among Republicans. House Speaker Paul Ryan, R-Wis, in May said the rule would be an “absolute disaster for our economy.”
Tuesday’s ruling followed a lawsuit by officials from 21 states, most of which are regarded as GOP strongholds. Officials from Alabama, Arkansas, Indiana, Louisiana, Kentucky, Mississippi, South Carolina and Texas all objected to the adjustment, and their challenge was joined with one from the U.S. Chamber of Commerce and other business groups.
“The Labor Department’s overtime changes are a reckless and aggressive overreach of executive power, and retailers are pleased with the judge’s decision,” David French, senior vice president for government relations at the National Retail Federation, said in a statement Tuesday. “We hope the judge ultimately finds in our favor, and in the meantime this timeout gives Congress a chance to take another look at the impact of these rules.”
Mazzant has not scrapped the policy update entirely, and the temporary injunction buys the court enough time to make a carefully considered decision with the rule’s intended Dec. 1 start date only a week away. Yet with Obama on his way out of the Oval Office, the clock is ticking for a decision to be made.
Proponents of the adjustment, meanwhile, have said Mazzant is executing his own overreach with his ruling, so a protracted legal battle is possible. But even if the outgoing administration wins the battle and launches its overtime initiative, it could very well lose the war.
“We have to address the issues of overtaxation and overregulation and the lack of access to credit markets to get our small-business owners thriving again,” Trump told media outlet Circa in an August interview. “Rolling back the overtime regulation is just one example of the many regulations that need to be addressed to do that.”