Judge Blocks Rule Extending Overtime Pay to Millions of Salaried Workers

A federal judge in Texas blocked an Obama administration rule on Tuesday expanding mandatory overtime pay to millions of salaried workers.

The regulation, which was developed with the Department of Labor, would have doubled the salary level under which salaried workers are eligible for earning overtime pay. The rule was scheduled to take effect on Dec. 1st and was protested as overreaching by a wide range of business groups, including the U.S. Chamber of Commerce and 21 states.

The Judge, Amos L. Mazzant III of the Eastern District of Texas, sided with the claims made by states and business groups in lawsuits filed in September that the Obama administration had exceeded its authority by increasing the salary threshold so drastically.

Lacking authority

In his ruling, Mazzant suggested that the Labor Department lacked the authority even to establish a salary limit, claiming that determining eligibility based on salary levels runs counter to the federal law that governs who is eligible for overtime.

While the injunction is only a temporary measure to stall the regulation until the judge issues a ruling, many believe that Mazzant’s language is an indicator of his decision to strike down the regulation. The judge’s decision is being celebrated by small business owners who argue that the new rules would be costly and result in fewer hours for workers.

Meanwhile, the Department of Labor says it disagrees with the decision and is “considering all of our legal options,” including an appeal in the final days of the Obama administration.  What does this mean for you? The regulation is currently suspended, which means that the proposed start date of Dec. 1st will likely not take effect and your salaried workers’ overtime status remains unchanged.

As this news develops, FingerCheck will keep you informed of the ultimate ruling on this matter.