Department of Labor Overtime Rule Blocked

A federal judge in Texas issued a nationwide injunction on November 22 against a controversial Obama administration regulation that would extend overtime pay to 4.2 million U.S. workers — one of the administration's most significant moves to address stagnant wages.  

The regulation, which was scheduled to take effect on December 1, would have required employers to pay overtime to most salaried workers who earn less than $47,476 annually. The threshold now remains $23,660.

U.S. District Judge Amos Mazzant, who was appointed by President Obama, agreed with 21 states and a coalition of business groups, including the U.S. Chamber of Commerce, that the rule is unlawful and granted their motion for a nationwide injunction.  Now, the rule will not be implemented as litigation continues.  The likelihood of this rule coming into effect on a future date is uncertain given the impending transition to a new administration.

The Department of Labor could expedite the review process and file an appeal in the Fifth Circuit with hopes of overturning the preliminary injunction.  But, based on the legal rationale provided in Judge Mazzant’s court order, it seems that the state’s coalition would have a good chance of ultimately prevailing in court over the Department of Labor.

Judge Mazzant wrote, “The State Plaintiffs have shown a likelihood of success on the merits because the Final Rule exceeds the Department’s authority.”  The Labor Department said it “strongly disagreed” with the decision and was “considering all of our legal options,” raising the possibility of an appeal in the waning days of the Obama administration.