Department of Labor issues overtime rules, despite federal court injunction

Josh Kim
Ноября 26, 2016

But the rule faced stiff opposition from small businesses, states, universities and other groups who said the higher threshold would raise costs.

The U.S. District Court in the Eastern District of Texas granted the nationwide preliminary injunction, saying the Department of Labor's rule exceeds the authority the agency was delegated by Congress.

Employees who receive salaries or wages below the eligibility level must be paid time and a half for all hours worked over 40 per week. The department is now considering its legal options, but Trump will be in charge of the department after taking office on January 20.

Texas Judge Amos Mazzant blocked the rule from going to into effect on December 1 on grounds that President Barack Obama and the U.S. Department of Labor do not have statutory authority to make changes to the maximum salary requiring overtime pay and automatic updating of the amount of overtime pay. Inflation weakened the act: overtime protections applied to 62 percent of USA full-time salaried workers in 1975 but just 7 percent today. The regulation would shrink the "white collar exemption" and more than double the salary threshold under which employers must pay overtime to their workers. Other stalled Obama initiatives involve shielding undocumented immigrants from deportation, mandating bathroom access for transgender students, and requiring labor-violation disclosures by federal contractors. "The department's overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule". Before the latest action, the regulation had not been updated in more than a decade.

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The U.S. Labor Department failed to consider regional salary and economic differences in setting the nationwide base pay rate, opponents said in challenging the new rule.

Some small business groups said they were glad for the delay. More than 4 million workers would have been eligible for overtime pay under the new rule, which will be on hold until the Department of Labor responds to the injunction.

According to NRF, research conducted for it by Oxford Economics found that the new overtime rules "would force employers to limit hours or cut base pay in order to make up for added payroll costs, leaving most workers with no increase in take-home pay despite added administrative costs". Rising wages and broad workplace definitions of what constitutes white-collar jobs have "left employees who should not be exempt without overtime protection", the government said in court filings. Even the labor department admits that it would have cost US businesses an extra $295 million a year.

Many employers have been preparing for next week's scheduled implementation of the new overtime rule.

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