A federal judge in Texas issued a nationwide injunction Tuesday against an Obama administration regulation expanding by millions the number of workers who would be eligible for time-and-a-half overtime pay. ADVERTISING A federal judge in Texas issued a nationwide injunction
A federal judge in Texas issued a nationwide injunction Tuesday against an Obama administration regulation expanding by millions the number of workers who would be eligible for time-and-a-half overtime pay.
The regulation was scheduled to take effect on Dec. 1. It would raise the salary limit below which workers automatically qualified for overtime pay to $47,476 from $23,660.
The judge, Amos L. Mazzant III of the Eastern District of Texas, ruled that the Obama administration had exceeded its authority by raising the overtime salary limit so significantly. The ruling was hailed by business groups who argued the new rules would be costly and result in fewer hours for workers.
The Labor Department said it “strongly disagreed” with the decision and was “considering all of our legal options,” raising the possibility of an appeal in the waning days of the Obama administration. Ross Eisenbrey of the Economic Policy Institute, whose writings on the subject helped shape the administration’s regulation, called the ruling “a disappointment to millions of workers who are forced to work long hours with no extra compensation.”
While the injunction is only a temporary measure that suspends the regulation until the judge can issue a ruling on the merits, many said the judge’s language indicated he was likely to strike down the regulation.
“We are, assuming that this preliminary injunction holds and there isn’t an appeal or some other thing that disrupts it, done with this regulation,” said Marc Freedman, executive director of labor law policy at the U.S. Chamber of Commerce, which had challenged the rule.
The fate of the regulation had already been thrown into question by the election of Donald Trump as president two weeks ago. Trump has promised to reverse many regulations approved during the Obama administration, and the Republican Congress has generally criticized the scope of the expansion of overtime eligibility.
Still, because undoing the regulation could have required a months- or yearslong rule-making process similar to the one that produced it, the new overtime limit appeared likely to survive in some form. Some business lobbyists had anticipated a legislative compromise that phased in the new limit over a longer period of time and eliminated an automatic increase in the limit every three years.
The injunction would appear to make such a reprieve far less likely, although the question remains whether the Trump administration will seek a legislative deal that would raise the salary limit above the $23,660 that has prevailed since 2004, but below the Obama administration’s preferred level.
“There’s no question that this decision changes a number of different points of leverage over the future of the rule,” said David French, senior vice president for government relations at the National Retail Federation, which opposed the new rule. French added, however, that his group and many other business organizations were open to some increase in the limit.
“We’re 12 years past the last update,” he said.
Supporters of the regulation have observed that the politics of essentially withdrawing a planned salary increase from many workers could prove complicated for an incoming president elected on a message of improving workers’ economic circumstances.
Further complicating the picture is the fact that many large employers have already raised the pay of some employees over the new $47,476 limit, concluding that it would be more cost-effective than paying them overtime. It is rare for employers to reverse such pay increases, making large employers potentially sympathetic to an overtime compromise that would effectively extend the salary increase to some of their smaller rivals.
Tuesday’s ruling arose from a case filed by a coalition of 21 states, who argued that the administration had exceeded its statutory authority in raising the overtime salary limit so significantly. A large number of business groups filed a similar lawsuit, and the suits were later consolidated.
In his ruling, Mazzant, whom President Barack Obama appointed, agreed with that logic and appeared to go even further, suggesting that the administration lacked the authority even to establish a salary limit — which the Labor Department has raised repeatedly since Congress enacted the underlying legislation in 1938.
“The court’s decision suggests that the Department of Labor has no authority whatsoever to regulate a salary minimum,” said Allan S. Bloom, of the law firm Proskauer Rose. (Mazzant pointed out in a footnote that he was not commenting generally on the legality of establishing a salary limit, however, only the particular increase that the plaintiffs had challenged.)
In a statement, the Labor Department defended how the rule was created.
“The department’s overtime rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule,” the statement said.
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