Judge Blocks Obama Administration’s New Rule That Would Have Expanded Overtime Pay to Millions of Workers
A federal district court judge in Texas blocked the Obama administration’s new overtime rule from taking effect on Tuesday, thereby denying the extension of overtime protections to an estimated 4.2 million workers. The rule had been scheduled to take effect on December 1.
The new overtime rule has been described by Senator Chuck Schumer (the new leader of the Democrats in the Senate) as “the middle-class equivalent of raising the minimum wage.” In short, the rule would have raised the salary threshold for when a salaried employee must receive time-and-a-half overtime pay when they work more than 40 hours in a week. Under current rules, employees are only eligible for overtime pay if their salary is less than $23,660 per year; the Obama administration’s new rules would have increased that threshold to $47,476 per year.
The effects that the new overtime rule would have had for workers shouldn’t be underestimated. Besides the obvious factor of some workers simply making more money once they were eligible for overtime, the rule was designed to spread employment among the middle-class and promote the health and well-being of workers by helping to re-establish the 40-hour work week as a staple of American life. For example, if a company employs four employees to each work 60-hour weeks, then once these workers are eligible for overtime it may decide it is more cost-effective to instead have six employees work 40-hour weeks. The company would still get 240 hours of “work” completed each week, but now the work is spread to more employees, and the stress and workload of each individual employee is reduced.
The defeat of the new overtime rule has already left some in the labor movement wondering what might have been. Writing for OnLabor, Andrew Strom of the Service Employees International Union, Local 32BJ in New York speculated whether earlier implementation of the new rule would have changed the outcome of the Presidential election:
The new rule, which goes into effect on December 1st (unless it is enjoined), will extend overtime protections to 4.2 million workers by raising the salary threshold for overtime eligibility from $23,660 a year to $47,476 a year. This means that in small towns across America, assistant managers of retail stores, low-level supervisors, and other moderate income workers who are paid on a salary basis will either experience a reduction in hours or a wage increase. These individuals can no longer be required to work a nine or ten hour day without receiving any extra compensation.
The White House put together a handy chart with a state-by-state breakdown of the number of workers affected by the new regulation. The number of new workers who will gain overtime protection in four key swing states are as follows: Florida, 330,000; Michigan, 101,000; Pennsylvania, 184,000; and Wisconsin, 68,000. It is, of course, impossible to say how many of these workers voted for Trump, and whether they would have voted differently if they had already gained overtime protection that Trump was threatening to take away, but for a President concerned about his legacy, it is a reminder of the perils of slow-walking a regulatory reform that has the potential to improve the lives of millions of workers.
The judge’s ruling is a preliminary injunction, not a final ruling, meaning that while the new overtime rule is blocked from taking effect, the block is technically temporary until a final determination in the case is made on the merits. However, given that part of granting the injunction involves a finding of a substantial likelihood of success on the merits, that Congressional Republicans have already introduced legislation to nullify the new rule, and that President-elect Donald Trump has promised to roll back President Barack Obama’s regulatory reforms, the injunction is likely a death sentence for the new overtime rule.
