A coalition of 21 state attorneys general and governors successfully sued to block the Obama administration’s overtime rule which was set to go into effect December 1.
Nevada attorney general Adam Laxalt, in partnership with 20 other state attorneys general and governors, had sued to stop it, and the group was granted a preliminary injunction; now, the rule will not be implemented as litigation continues. Unless the Department of Labor engages in an unusually aggressive effort to expedite the response to Mazzant’s ruling, the litigation is likely to outlast the Obama administration – and, under a Trump administration, one can assume that Department of Labor officials will drop the litigation or roll back the rule.
The rule would have forced both public- and private-sector employers to pay time-and-a-half overtime to any hourly employees earning less than $47,476 per year, nearly double the old threshold of $23,660. Employees earning less than the threshold but performing “executive, administrative, or professional” duties were previously exempt from the DOL’s overtime requirements, but the new rule mandates that they receive time-and-half pay for extra work, too.
In so doing, it directly overrides the exemptions outlined by Congress in the Fair Labor Standards Act. In addition to modifying the threshold and eliminating the white-collar exemption, the Obama administration created an algorithmic method to automatically update the salary threshold every three years based on wage growth and other factors. Laxalt calls this algorithm “ratcheting,” and it is a significant component of his lawsuit.
Laxalt and his coalition sued the Department of Labor on the grounds that the overtime rule overrode congressional authority by omitting white-collar exemptions; it violated the Tenth Amendment by forcing states to pay employees a specific salary, indirectly controlling state budgets; and it violated the Administrative Procedure Act by ratcheting up the salary threshold every three years.
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. 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.