In a blow to the Obama administration’s labor-law plans, a federal court has blocked the start of a rule that would have made an estimated 4 million more American workers eligible for overtime pay heading into the holiday season.
As a result of Tuesday’s ruling, overtime changes set to take effect Dec. 1 are now unlikely be in play before vast power shifts to a Donald Trump administration, which has spoken out against Obama-backed government regulation and generally aligns with the business groups that stridently opposed the overtime rule.
The U.S. District Court in the Eastern District of Texas granted the nationwide preliminary injunction, saying the Department of Labor’s rule exceeds the authority the agency was delegated by Congress.
“Businesses and state and local governments across the country can breathe a sigh of relief now that this rule has been halted,” said Nevada Attorney General Adam Laxalt, who led the coalition of 21 states and governors fighting the rule and has been a frequent critic of what he characterized as Obama administration overreach. “Today’s preliminary injunction reinforces the importance of the rule of law and constitutional government.”
The regulation sought to shrink the so-called “white collar exemption” that allows employers to skip overtime pay for salaried administrative or professional workers who make more than about $23,660 per year. Critics say it’s wrong that some retail and restaurant chains pay low-level managers as little as $25,000 a year and no overtime — even if they work 60 hours a week.
Under the rule, those workers would have been eligible for overtime pay as long as they made less than about $47,500 a year, and the threshold would readjust every three years to reflect changes in average wages.
The Department of Labor said the changes would restore teeth to the Fair Labor Standards Act, which it called “the crown jewel of worker protections in the United States.” Inflation weakened the act: overtime protections applied to 62 percent of U.S. full-time salaried workers in 1975 but just 7 percent today.
The agency said it’s now considering all its legal options.
“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 labor department said in a statement. “The department’s overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule.”
The ruling dealt a major blow to the Obama administration’s effort to beef up labor laws it said weren’t keeping pace with the times.
Opponents fought hard against the rule, saying it would increase compliance costs for employers who would have to track hours more meticulously and would force companies to cut employees’ base pay to compensate for overtime costs that kick in more frequently.
“This overtime rule is totally disconnected from reality,” said Karen Kerrigan, president and CEO of the Small Business and Entrepreneurship Council. “The one-size-fits-all doubling of the salary threshold demonstrated ignorance regarding the vast differences in the cost-of-living across America.”
The court agreed with plaintiffs that the rule could cause irreparable harm if it wasn’t stopped before it was scheduled to take effect next week.
The Department of Labor could appeal the Tuesday ruling, which might end up at a Supreme Court that includes some Trump appointees.
But the injunction takes political pressure off the incoming administration at an opportune time, according to labor law professor Ruben Garcia of UNLV’s Boyd School of Law. With no new overtime changes kicking in Dec. 1, Trump can accept the status quo and won’t have to risk angering workers by walking back overtime benefits shortly after employees start receiving them.
His administration could choose to make its own rule changes through the lengthy administrative process. Or Congress could amend labor laws.
The impending rule wasn’t front and center in the presidential campaign, but Trump did tell the news site Circa in August that he would love to see a delay or carve-out for small businesses in the overtime regulation. Republican House Speaker Paul Ryan was more vocal against it, saying it would be an “absolute disaster” for the economy and was being rushed through by Obama to boost his political legacy.
The Associated Press contributed to this article.
Paid jobs in many industries are going the way of the dodo, in other words towards oblivion, for the last 50 to 60 years, middle class and lower paid wages compared to the price of major items like housing, vehicles etc., etc., have been falling due to “off-shoring and now automation, it is long after the time when people employed in those many industries found a means of “self-employment” and re-trained for it, sufficient to give them a decent income, which I estimate would be equal to about two thirds of the average price of a house yearly, and the average six cylinder car about ten to fourteen weeks of net pay, which more than a half century ago, used to be the norm.
Just a small piece of the Obama Care which spins in every direction, IRS, Labor Regulations and an unending list of on going changes with negative effects; it is still in the phase changes.
Since this law isn’t “interstate commerce” the fed has no business being involved in any way, shape, or form (like about 9/10ths of everything the fed has usurped). If this can be twisted into being “interstate commerce”, I would say there is nothing on the entire planet that can’t be called “interstate commerce”. Of course, that doesn’t stop our lawless libs…
Wages should be set by the states not the Federal government. I worked with a guy that moved to Oklahoma in 1959 from New York City. He went to one of the realtors to see about leasing a home. The realtor asked him how long of lease he was interested in and how much money he was expecting to pay. When he told the realtor what he was expecting the realtor said “You are more than qualified to buy a home” He sold him a home instead. He did say that the reason he was just looking to rent or lease was his wages were way less in Oklahoma than NYC. After he figured how much less taxes he was paying he was actually saving more money while making less. That is why wages should be state not federally regulated.
Wasn’t it the intention of Obama to ruin the economy of our nation and build it up int the socialist Utopia envisioned by Cloward-Piven?
Obama created a parallel government, instituted Czars, and a private security force. Most of his success story regarding healing our unemployment problem is a lie! He has had his administration create thousands of government jobs that tier down from nothing more than “feather-bedding” positions. In other words, WE, the TAX PAYING CITIZENS, have been burdened with supporting all of these non-essential jobs just so Obama can add them to the list of those employed. Don’t forget, all of these government jobs have plenty of ‘perks’…including handsome retirement packages. Putting constraints on ‘needless’ overtime is a good start in curbing all of this fraud, waste and abuse of government spending.
Another set back for Emperor O’bozo the “Big Eared” Clown and well deserved for someone who’s accomplished -0- in his 7 years 10 months in office.
Wow Obama was right even though he was wrong about how to do it. Too many companies have cut the hours of their employees, but when they work overtime your telling me they don’t deserve a bump in pay for it, for time away from their families? Yet the top paid people rarely work overtime and their pay is way over $50k. Keep taking advantage of the people and the will eventually rebel.
No once again Obozo overstepped his authority. He is not the King.
For years my wife has been a salaried “manager” working 50 or more hours a week with no overtime. She made a better living before as an hourly employee with a fraction of the stress. I suspect she will leave the company now after 10 years. She thought she was going to finally receive compensation for the work she has been doing. I guess not.
As a former salaried manager, when working unpaid overtime, negotiated for equal “compensation” time off. When leaving the company, received any accrued vacation time plus several weeks of “compensation” time for unpaid overtime.
CLUELESS!!!! Wages and standard of living varies greatly between states making this “unworkable”………does he even begin to know how to think rationally???? Duh?