Obama’s Overtime Rule Rejected in Federal Court

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President Obama’s controversial overtime rule has been rejected in federal court.

Yesterday, a Texas federal court judge ruled in favor of the 55 state and business plaintiffs who argued that the Department of Labor had exceeded its authority when it doubled the salary threshold from $455/week to $913/week, extending overtime benefits to more than 4 million workers. The judge, Amos Mazzant, an Obama appointee, initially put the matter on hold last November, delaying its December 1 commencement. Yesterday’s ruling, however, put the final nail in the coffin. The Obama overtime rule is invalid. If you were on the side of those who thought these policies “anti-business”, yesterday’s ruling is a huge, huge win.

But don’t count overtime reform out just yet.

Remember that, the Obama administration appealed to the 5th Circuit shortly after Judge Mazzant’s November ruling (the delay). When Trump became president, his Department of Labor kept that appeal going. Trump and his DOL thought Obama’s salary threshold too high but thought they might want to someday use salary, not just job description, as a determinant for overtime pay. The Trump administration even asked the public this summer to weigh in on how it should set a new overtime standard and what the salary and criteria should be. In other words, Trump appears to be in favor of overtime reform. We just don’t know all the specifics yet.

Trump’s Secretary of Labor, Alexander Acosta, indicated that the DOL is going to take another stab at drafting the overtime regulations. He also stated that he believes the current salary threshold is too low.  Again, another vote for reform and salary-based criteria.

Confused? I don’t blame you. But just remember, the judge’s order yesterday only did one thing: It invalidated Obama’s overtime rule. It did not say another president couldn’t write his own rule, and it didn’t say that salary can never be used as a determinant for who gets overtime pay. Rather, Mazzant objected to Obama’s specific salary threshold because of its size, which he said upended the duties component. (The judge made this even clearer in a footnote, saying he understood why there might be confusion over the right to use any salary-level test, but he was not making any such judgment.)

So what happens next? It’s still possible the judges on the 5th Circuit Court of Appeals could keep the earlier appeal alive if they believe the broad question of authority still hasn’t been adequately resolved. Trump could also appeal yesterday’s decision. But with the narrow way the judge constructed his opinion, Trump likely has no reason to do so. My guess is that President Trump will propose his own overtime plan soon.

Trump has the next move. Keep your eyes on this.

 

 

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