Court Blocks New Federal Overtime Rule

laborFederal Judge Amos Mazzant, of the Eastern District of Texas granted a preliminary injunction Nov. 22 that delays implementation of a regulation set to take effect next week, on Dec. 1, that would raise the salary threshold under which many workers qualify for overtime.  The injunction will remain in place while the Court determines the U.S. Department of Labor’s authority to impose the rule and the rule’s validity.

Under the new standard most salaried workers earning up to $47,476 a year must receive time-and-a-half overtime pay when they work more than 40 hours during a week. That’s more than double the current salary threshold for overtime eligibility of $23,660.  There are concerns that this 100% increase in the salary threshold and the accelerated implementation of the requirement exceeds the fiscal capacity of many school districts.

The National School Boards Association (NSBA) had submitted a letter to Senator Lamar Alexander, Chairman of the Senate Health, Education, Labor and Pensions Committee, and Rep. Kurt Schrader, both of whom have filed bills to delay implementation of the rule, urging immediate legislative action to delay implementation of the rule and provide relief to school districts by establishing a multi-year “phase in” of the salary increases. Now, none of these efforts may be necessary.

From Politico:

Although the injunction is only temporary, Mazzant’s decision signaled a strong likelihood that he’ll eventually side with 21 state attorneys general and a coalition of business groups that sued to block the regulation.

“The State Plaintiffs have shown a likelihood of success on the merits because the Final Rule exceeds the Department’s authority,” Mazzant wrote.

In his opinion, Mazzant said that in issuing the rule, the Labor Department “exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary threshold such that it supplants the duties test.” Under the duties test, an employee is exempt from overtime pay if he or she earns wages in excess of the salary threshold and has duties that are administrative, executive or professional.

Mazzant said that “if Congress intended the salary requirement to supplant the duties test, then Congress and not the Department, should make that change.”

WASB will keep members updated here as this process moves forward.