Yesterday, U.S. District Judge Amos L. Mazzant, appointed by President Barack Obama, issued a nationwide injunction against the administration’s final overtime rule, which was scheduled to take effect on Dec. 1.
The temporary injunction came as the result of a consolidated legal challenge against the rule, brought by 21 states and more than 50 business groups.
The plaintiffs argued that the rule overstepped the Department of Labor’s statutory authority and that the automatic updating mechanism to the salary threshold violated the requirement that such actions undergo a formal rulemaking process.
In a 20-page ruling, Mazzant sided with the plaintiffs, stating that the Department of Labor overstepped its regulatory authority in issuing the rule, which would have doubled the salary threshold under which employees must be paid time-and-a-half for any hours over 40 that they work in a given week.
Mazzant wrote that “the department exceeds its delegated authority and ignores Congress’ intent,” which is to allow an exception to overtime pay for workers who perform executive, administrative, or professional duties.
By setting the threshold so high—at $47,476, or 40 percent of the median wage—Mazzant wrote that the final rule is “directly in conflict with Congress’ intent” because it “creates essentially a de facto salary-only test.”
Mazzant also stated that the final rule is “unlawful.”
In addressing the plaintiff’s argument that the automatic increase in the threshold violates the rulemaking procedure requirements, Mazzant wrote:
Because the final rule is unlawful, the court concludes the department also lacks the authority to implement the automatic updating mechanism. Thus, there is no need to address the state plaintiffs’ other arguments.
Mazzant’s statements suggest that a potential countermanding injunction or appeal will not succeed, meaning that anything resembling the final rule is unlikely to take effect.
That’s good news for President-elect Donald Trump because canceling a rule before it takes effect is far easier than attempting to roll it back after the fact—a process that could take years.
It’s also welcome news for businesses, workers, and families across the U.S.
According to a recent report from the nonpartisan Congressional Budget Office, over the first seven years, the overtime rule would cost businesses $6.9 billion in compliance costs, raise prices by $6.9 billion for consumers, and reduce family incomes (across all income groups) by $8.5 billion.
All these costs for only $2.7 billion in additional wages spread across less than 1 million workers (an average annual increase of $450 per affected worker).
And even those wage increases are questionable, as evidence suggests businesses would keep overall pay the same by reducing base salaries or shifting salaried workers into hourly ones.
Workers, families, and businesses should celebrate this temporary injunction, and hopefully permanent end to a rule that would create significant economic harm.
