Judge Puts Kibosh on Obama’s Overtime Rule

SHERMAN, Texas (CN) — A Texas federal judge blocked an Obama administration rule change that would double the income ceiling for overtime and make millions more workers eligible for it.

U.S. District Judge Amos Mazzant issued the preliminary nationwide injunction Tuesday against a rule change by the U.S. Department of Labor that will increase the overtime exemption for white-collar employees under the Fair Labor Standards Act from $23,660 to $47,476 — from $455 per week to $913.

Ordered by the White House in May, the change was to take effect on Dec. 1.

Texas and 20 other states sued in September, claiming the rule change was not authorized by Congress and that workers would face reduced hours and lower salaries due to increased labor costs.

They claimed that many workers who would be eligible for overtime under the new rule would be disqualified anyway because they perform management duties.

Mazzant concluded that the rule change does not conform with congressional intent.

“Directly in conflict with Congress’s intent, the final rule states that ‘[w]hite collar employees subject to the salary level test earning less than $913 per week will not qualify for the [white-collar] exemption, and therefore will be eligible for overtime, irrespective of their job duties and responsibilities,'” the 20-page opinion states.

“With the Final Rule, the department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test.”

Mazzant was persuaded by the states’ argument that the rule change contravenes the public interest by “increasing state budgets, causing layoffs and disrupting government functions.” He said a preliminary injunction would merely delay enforcement if the rule is determined to be valid.

“The state plaintiffs have established a prima facie case that the department’s salary level under the Final Rule and the automatic updating mechanism are without statutory authority,” Mazzant wrote. “The court concludes that the governing statute … is plain and unambiguous and no deference is owed to the department regarding its interpretation.”

Texas Attorney General Ken Paxton applauded the ruling, scolding the Obama administration for assuming “that through force of will alone, it could order a new economic reality into existence.”

“The finalized overtime rule hurts the American worker. It limits workplace flexibility without a corresponding increase in pay and forces employers to cut their workers hours,” Paxton said in a statement. “All in all, it exchanges the advantages of negotiated benefits, personal to each worker, with a one-size-fits-all standard that only looks good in press statements.”

Oklahoma Attorney General Scott Pruitt said the Obama administration has tried to “pinch-hit” for Congress, but has been repeatedly swatted down by the courts in favor of the states. He said it “comes as no surprise” the judge in this case concluded the rule change is unlawful.

“This decision is a victory for state and local governments as well as businesses in Oklahoma and across the country,” Pruitt said Wednesday. “The rule would result in hours reduced, salaries slashed and and jobs lost – now, this injunction provides certainty to Oklahoma employees and stability for their families.”

Secretary of Labor Thomas Perez has said rule change would “restore the intent” of the Fair Labor Standards Act, “the crown jewel” of worker protections.

“The crown jewel has lost its luster over the years: in 1975, 62 percent of full-time salaried workers had overtime protections based on their pay; today, just 7 percent have those protections, meaning that too few people are getting the overtime that the Fair Labor Standards Act intended,” Perez said in September.

Between 1938 and 1975, the overtime salary threshold rose every five to nine years through actions by Republican presidents Eisenhower, Nixon and Ford and Democratic presidents Truman and Kennedy.

From 1975 until 2004, the overtime threshold saw just one update: in 2004 during the George W. Bush administration, when the threshold was set at $23,660 — below the poverty level for a family of four.