Obama’s Overtime Rule is Officially No More

After an eight-month wait for an official ruling on the Obama Administration’s updated overtime regulations, a federal judge officially dismissed the overtime rule on Thursday, August 31.

U.S. District Judge Amos Mazzant, the same judge who had blocked the rule with a temporary injunction in November of last year, ruled that while the President Obama’s Labor Department did have the authority to establish a salary threshold, the threshold was set so high that it rendered the assessment of a worker’s duties in determining overtime eligibility irrelevant.

“This significant increase would essentially make an employee’s duties, functions, or tasks irrelevant if the employee’s salary falls below the new minimum salary level,” Mazzanti said.

The rule, which would have updated the overtime regulations for the first time since 1975, was contested in court by 21 states and business advocacy groups. Nevada Attorney General Adam Paul Laxalt, who represented the 21-state coalition, released a statement on August 31.

“I applaud Judge Mazzant’s decision to permanently invalidate this Obama-era overtime rule that would have would have imposed millions of dollars of unfunded liabilities on the States and resulted in a loss of private-sector jobs as well as onerous financial and regulatory burdens on small businesses in Nevada and around the country,” said Laxalt.

If passed, it would have boosted the wages of more than 4.2 million U.S. workers. Under the new regulations, employers would have been required to pay overtime to salaried workers earning $47,476 or less annually, whereas currently, the salary threshold is just $23,660.

But Christine Owens, Executive Director of the National Employment Law Project, a worker advocacy group, said the decision “strips hard-earned, long overdue overtime pay protections from millions of America’s workers forced to put in extra hours on the job — away from their families — with no extra pay at all.”

According to Employment Attorney J Bryan Wood, Founder of The Wood Law Office LLC, “The August 31 decision granting summary judgment is not necessarily the end of the road. But the DOL rule is on life support – and the current DOL may watch it die rather than resuscitate it by appealing the August 31 decision. Even absent an appeal, employers can’t rest.”

He adds that employers must “turn their attention towards possible new DOL rules or – more likely – state or local legislative or regulatory initiatives that try to achieve the same goals as the DOL’s rule. For multi-state employers, piecemeal laws or regulations could make compliance even more costly than a uniform national rule.”