A Texas federal judge on Tuesday blocked the implementation of new overtime rules issued by the Obama administration earlier this year.
Judge Amos Mazzant granted a nationwide preliminary injunction blocking the implementation of the rule that would have required overtime pay for most salaried employees making less than $47,476 per year.
A group of 21 states, including Wisconsin, sued the U.S. Department of Labor and Secretary Tom Perez to block rule. Wisconsin Attorney General Brad Schimel said at the time the rule was a federal overreach and on Tuesday said he was “incredibly happy” the rule was put on hold.
“There’s no greater honor than representing millions of Wisconsinites in the continuous fight for the return of power to our citizens, away from an out-of-control federal bureaucracy in Washington D.C. Wisconsin must have the ability to set its own priorities and policies.” Schimel said.
Businesses have been preparing for the new federal overtime rules, which were set to take effect on Dec. 1.
Mazzant’s opinion found the states were likely to succeed on the merits of the case. He determined the rule issued by the department is “directly in conflict with Congress’s intent,” by stating that white collar employees making less than $913 per week would be eligible for overtime “irrespective of their job duties and responsibilities.”
The original legislation included an exemption for employees in executive, administrative and professional positions.
“The department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test,” Mazzant wrote.
The rule also included a provision that would have automatically updated the salary level every three years based on the 40th percentile of weekly earnings for full-time salaried workers in the lowest wage region of the country. The states argued that mechanism violated federal law because it didn’t include a notice or comment period for the adjustment.
Mazzant determined the department did not have the authority to implement the automatic updating since the other portions of the rule were already deemed unlaw.
The department had estimated the rule change would have made millions of workers eligible for overtime pay. Businesses faced the prospect of either paying overtime, raising salaries above the threshold or limiting hours.
The National Association of Manufacturers was among the business groups to oppose the rule and applauded the decision.
“Today’s decision is an important win for all manufacturers in America—halting what would have been a dramatic and devastating change in labor law that manufacturers could not afford,” said Linda Kelley, NAM senior vice president and general counsel.
Reuters reported a spokesman said the Labor Department strongly disagrees with the decision and remains confident the entire rule is legal. The report noted the department could appeal to the 5th U.S. Circuit Court of Appeal or the appeal could be dropped once President-elect Donald Trump takes office in January.
