Texas Judge issues Nationwide Injunction Against Obama's Overtime Rule

Special from Forbes - Daniel Fisher , FORBES STAFF  

A federal judge in Texas has issued a nationwide junction blocking the Department of Labor's rule requiring overtime pay for more than 4 million new workers.

In a 20-page decision, U.S. District Judge Amos L. Mazzant ruled that 21 states and more than 50 business groups that sued to block the rule stood a significant chance of success and would suffer serious financial harm if the rule was put into effect as scheduled on Dec. 1. The Obama administration overstepped its authority by raising the salary cap below which all workers must receive overtime pay from $455 a week to $921 a week or $47,892 a year, the judge wrote.

The administration argued it was merely updating the rule to keep up "with our modern economy." But the judge said the increase to the 40th percentile of all weekly earnings in the U.S. effectively eliminated the exception in labor law for "bona fide executive, administrative or professional" employees. The Labor Dept. must examine the duties of employees to determine who fits the exception, the judge said. But by raising the cap so high, he said, "the Department exceeds it delegated authority and ignores Congress's intent by raising the minimum salary level such that it supplants the duties test."

The injunction halts enforcement of the rule until the government can win a countermanding order from an appeals court. Given Texas is in the conservative Fifth Circuit, that could be a challenge. In the meantime, retailers who would be particularly hard-hit by the rule celebrated.

"The rules are just plain bad public policy, and we are pleased that the judge is allowing time for the case to go forward before they can go into effect," said David French, vice president for government relations at the National Retail Federation, in a statement. "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."

The judge rejected the government's plea to hold off on an injunction, saying the states would suffer immediate harm as they were forced between raising the salaries of thousands of managerial employees or cutting back on services and work hours. The rule can await a trial on the merits, he said.

The judge also rejected the states' argument that overtime rules don't apply to them at all. The U.S. Supreme Court has ruled that labor laws do apply to the states, and while that decision is in dispute and has been hemmed in a bit by subsequent rulings it is still the law, he wrote.

Given Donald Trump's victory and the Republican takeover of both houses of Congress, it is unlikely the Labor Dept. will be able to revive this rule, which like a string of other rules appeared to be a direct favor to labor unions.
 

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