A federal judge has blocked a Department of Labor rule on overtime pay that made more than 4 million private-sector workers eligible for mandatory extra pay or time off.
U.S. District Judge Amos Mazzant of the Eastern District of Texas, whom President Obama appointed, imposed a nationwide injunction against the rule Tuesday at the request of 21 states, the U.S. Chamber of Commerce and other business groups.
Business groups cheered the decision as another rebuke of the Obama administration’s penchant for regulation and for extending executive power.
“The Labor Department’s overtime changes are a reckless and aggressive overreach of executive power, and retailers are pleased with the judge’s decision,” said David French, the National Retail Federation’s senior vice president for government relations.
The judge said the Labor Department regulation exceeded the authority granted it by Congress, which he said gave Labor the right to define which workers are considered salaried but only based on the duties they performed, not by how much they made.
The Labor Department regulation, which business groups claimed would cost them $12 billion a year over the next decade, raised the salary threshold for receiving mandatory overtime from $23,660 to $47,476 a year, or from $455 to $913 a week.
Currently, salaried employees who are paid more than $455 a week can be deemed “managers” even if they have little in the way of supervisory duties. They therefore become ineligible to be paid at higher overtime rates if they work more than 40 hours per week.
“Congress defined the … exemption with regard to duties, which does not include a minimum salary level,” Judge Mazzant wrote. “The Department’s role is to carry out Congress’s intent. If Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change.”
The judge added that the impact of the law was so great that, according to previous Supreme Court and 5th Circuit rulings, the power to make it would have to be expressly delegated to the Labor Department by Congress, not implicitly granted as the Obama administration had argued.
The rule, which makes 4.2 million fewer workers exempt from overtime rules under the “manager” exception, had been scheduled to take effect Dec. 1.
Retailers and lawmakers from rural and less-affluent areas also complained that the rule used a nationwide yardstick, setting up a standard for supervisor pay that, while it might be reasonable for New York or Los Angeles, would be far too broad for areas where the cost-of-living is lower.
“I am pleased that a Federal District Judge has, yet again, pumped the brakes on another harmful regulation from the Obama administration. This federal overtime rule is devastating … but particularly in states with a low cost-of-living. The economic realities and regional cost-of-living differences that exist throughout the country were completely ignored by the Department of Labor on this proposal. I am hopeful that this rule can be brought back to the drawing board for a new rule-making process that works for the entire nation,” said Sen. James Lankford, Oklahoma Republican.