U.S. District Court Halts Overtime Rule Just in the Nick of Time

The U.S. District Court in the Eastern District of Texas halted the implementation of the Department of Labor’s (DOL) overtime rule just as it was about to take effect this Thursday. This recent court ruling is a huge win for business owners across the country who would have been hit hard by the rule change. In the ruling last Tuesday, Judge Amos Mazzant wrote, “the department exceeds its delegated authority and ignores Congress’ intent.”

Scheduled to take effect on December 1st, the overtime rule doubles the salary threshold – from $23,600 to $47,476 a year – at which employers must pay their workers overtime. President Obama’s DOL argues that the overtime rule change would increase wages for millions of low-salaried workers in the restaurant, retail and manufacturing industries. In reality, most of these workers would have seen some combination of lower base wages, reduced workplace flexibility, a move from salary to hourly status, and potential layoffs as businesses dealt with the dramatic increase in labor and compliance costs.

According to a report from the Congressional Budget Office (CBO), the overtime rule would cost businesses $6.9 billion, raise prices by $6.9 billion for consumers, and lower family incomes by $8.5 billion within the first seven years of implementation.

21 state attorneys and dozens of business groups challenged the legality of the overtime rule in federal court earlier this year and the House of Representatives passed a 6-month delay of the overtime rule in hopes that a new Administration would dismantle the rule. Heritage Action supported legislative efforts to stop or delay the overtime rule all year long.

Back in September, Heritage Action CEO Michael A. Needham released the following statement: “The Obama administration’s new overtime rule will hurt more hardworking Americans than it would help. In typical fashion, unelected bureaucrats are attempting to micromanage the payroll of nearly every business in this country. Even House Democrats know the Obama administration’s overtime rule is bad for small businesses, so there is no excuse for inaction and opposition to this commonsense delay.”

Given this recent court ruling and the election of Donald Trump to the White House, who has indicated opposition to many of the business regulations proposed under President Obama, the overtime rule appears dead. Congress should work to ensure the Department of Labor officially takes the rule off the table early next year under a Trump Administration.

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