Judge Strikes Down Federal Overtime Rule

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Judge Strikes Down Federal Overtime Rule

09/01/2017

SHERMAN, Texas — A federal judge has ruled against a new federal overtime regulation handed down by the Obama administration.

The rule would have nearly doubled current salary threshold from its current $23,360 to $47,476, under which virtually all workers will be eligible for mandatory time-and-a-half overtime pay. This change would make nearly 5 million currently exempt employees eligible nationwide. 

However, on Aug. 31, U.S. District Judge Amos Mazzant in the Eastern District of Texas said the salary level was set so high that it could sweep in some management workers who are supposed to be exempt from overtime protections, according to Reuters.

His ruling came nine months after he granted an injunction just days before the new rule was set to take effect, as CSNews Online previously reported.

The injunction was in response to a legal challenge filed by more than 20 states and a coalition of business groups, led by Nevada Attorney General Adam Laxalt, in September.

Mazzant's latest ruling invalidates the rule permanently.

"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," Laxalt said. "My office is proud to have led the charge towards a final ruling that brings clarity, certainty and closure to the business community and government alike."

Joining Nevada in legal challenges were: Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah and Wisconsin. Four more states — Missouri, Colorado, Montana, and Wyoming — filed a friend of the court brief supporting the challenge.

"The former Obama administration's expansion of the federal overtime rule would have devastated Nevada's business owners and job creators. Since the rule was issued last year, I have been strongly concerned about its impact because it would fundamentally change how employers compensate their workers, reducing Nevadans' work hours and benefits," said U.S. Sen. Dean Heller (R-Nev.).

"I'm pleased to see that a federal judge acknowledged the regulation's harmful consequences and ruled it invalid today," he added in statement on Aug. 31. "Today's news is a relief for countless Nevada businesses and employers, and I commend Nevada Attorney General Adam Laxalt for his leadership in this fight."

However, not all legislators applauded the decision.

"I strongly disagree with the court's ruling and believe the Department of Labor under President Obama and Secretary [Tom] Perez was well within its authority to provide the first meaningful update to the overtime rule in four decades,'' said U.S. Rep. Mark Takano (D-Calif.), ranking member of the Subcommittee on Workforce Protections. "The updated salary threshold is entirely consistent with the intent of the Fair Labor Standards Act, which is to protect the ability of middle-class workers to be paid fairly for the hours they work.    

"If the Trump administration is at all concerned with keeping its promise to working families, then Secretary [Alexander] Acosta must appeal this decision and fight for the millions of workers who continue to be denied overtime pay or time with their families," he added. 

The U.S. Department of Labor said in late June that it wants salary level to count in deciding who is eligible for overtime pay. The Labor Department did not endorse the Obama administration's salary maximum and is seeking public information on a new threshold.