Rule for Overtime Pay Struck Down

Rule for Overtime Pay Struck Down

U.S. District Judge Amos Mazzant has struck down the rule for overtime pay, saying the Labor Department set an excessively high salary threshold to determine which employees are exempt from overtime.

The decision was widely anticipated after Mazzant granted a preliminary injunction in November that prevented the overtime rule from taking effect as scheduled on Dec. 1 while he weighed a final ruling.

Many businesses said the rule would have sharply increased labor costs and hurt morale by forcing employers to demote managers to hourly employees.

The rule, released by the Obama administration in May 2016, would have nearly doubled the threshold at which executive, administrative and professional employees are exempt from overtime to $47,476 from $23,660.

Twenty-one states and many business groups challenged the overtime expansion, arguing that Congress never intended to set any salary threshold for the exemptions or to allow the threshold to be raised every three years.

Mazzant, however, said that President Obama’s Labor Department had the authority to establish a salary threshold, but set it as such a high level as to render irrelevant the assessment of a worker’s duties in determining overtime eligibility.

In other words, too many workers would have been eligible for overtime under the new benchmark even if they performed executive, administrative or professional functions.

Thursday’s decision “demonstrates the negative impacts these regulations would have had on businesses and their workers,” Angelo Amador, senior vice president of the National Restaurant Association, said in a statement. “We will continue to work with (the Labor Department) to ensure workable changes to the overtime rule are enacted.”

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