Judge Strikes Down Obama Era Overtime-Pay Rule

SHERMAN, Texas (CN) – Just days before Labor Day, a federal judge in Texas struck down a U.S. Department of Labor rule that would have made millions more employees eligible to receive overtime pay.

U.S. District Judge Amos Mazzant in Sherman, Texas federal court ruled Thursday that the Labor Department exceeded its authority by raising the salary threshold for those eligible for overtime pay from $23,660 to $47,476 a year.

Judge Mazzant is an appointee of former President Barack Obama. He is perhaps best known for issuing the initial injunction in November against the overtime rule, and for dismissing securities fraud charges against Texas Attorney General Ken Paxton last October.

The overtime rule, one of the Obama administration’s key labor policies, would have extended overtime pay to more than 4 million U.S. workers.

Nevada and 20 other states, the U.S. Chamber of Commerce and other business groups sued the department over the rule, contending that it would have had a devastating financial impact on state and local governments and private businesses, which would have had to substantially increase their employment costs.

In a statement Thursday, Marc Rylander, communications director for the Texas Attorney General’s office, said that the overtime rule was “one of the many egregious examples of federal overreach that occurred during the Obama era.”

“The Overtime Rule limits workplace flexibility without a corresponding increase in pay and forces employers to cut their workers’ hours,” Rylander said.

Mazzant granted the plaintiffs a temporary injunction last November, 10 days before the rule was scheduled to go into effect.

On Thursday, the judge struck it down permanently, saying in his ruling that the Labor Department improperly considered salaries rather than job descriptions to determine whether a worker should be eligible for overtime pay.

Mazzant found that “Congress intended for employees who perform ‘bona fide executive, administrative, or professional capacity’ duties to be exempt from overtime pay,” and that the department does not have the authority to use a salary-level test to determine who receives overtime pay.

“As a result, entire categories of previously exempt employees who perform ‘bona fide executive, administrative, or professional capacity’ duties would now qualify for the … exemption based on salary alone,” the judge wrote in an 18-page ruling.

Mazzant added, “If Congress was ambiguous about what specifically constituted an employee subject to the [executive, administrative, and professional] exemption, Congress was clear that the determination should involve at least a consideration of an employee’s duties.”

Christine Owens, executive director of the National Employment Law Project, said in a statement that Mazzant’s ruling “strips hard-earned, long overdue overtime pay protections from millions of America’s workers forced to put in extra hours on the job … with no extra pay at all.”

“With no analysis of the record or relevant empirical data, Judge Mazzant has substituted his own judgment for that of the Department of Labor, which published the overtime rule after two years of work, soliciting extensive comment from stakeholders prior to regulation, engaging in a full notice and comment period, and then further considering the nearly 300,000 comments submitted, the overwhelming majority of which were favorable to the proposed rule,” Owens said Thursday.

But Nevada Attorney General Adam Laxalt said in a statement Thursday that his office was “proud to have led the charge towards a final ruling.”

“I applaud Judge Mazzant’s decision to permanently invalidate this Obama-era overtime rule that 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.

 

Meanwhile, Owens called on U.S. Labor Secretary Alexander Acosta to appeal the decision, but it is unlikely that he will.

Acosta, appointed by President Donald Trump, said during his Senate confirmation in May that although the overtime rule should be updated, the previous administration had raised the salary minimum too high.

 

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