Federal judge blocks implementation of Labor Department's overtime-pay rule

A federal district court judge in Texas late yesterday blocked the nationwide Dec. 1 implementation of the Department of Labor's controversial rule that would have broadened the number workers who would be eligible for overtime pay, saying the agency had overstepped its legal bounds.

U.S. District Judge Amos Mazzant slapped a preliminary injunction on the DOL rule, which would increase the annual full-time salary threshold for overtime eligibility to $47,476 from $23,660. In its first year, the new policy was expected to make 4.2 million additional U.S. workers eligible for overtime pay. The rule also established a mechanism to automatically update salary and compensation levels every three years starting on Jan. 1, 2020.

Twenty-one states and a coalition of business groups, including the U.S. Chamber of Commerce, had sought the injunction on grounds that it would raise costs and hurt job growth.

"A preliminary injunction preserves the status quo while the court determines the department's authority to make the final rule as well as the final rule's validity," said Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas in a Nov. 22 ruling.

In a statement, DOL said it was weighing all its legal options. "We strongly disagree with the decision by the court, which has the effect of delaying a fair day's pay for a long day's work for millions of hardworking Americans," the agency said. "The department's overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options."

The ruling is a victory for the public warehousing industry, which through its trade group, the International Warehouse Logistics Association (IWLA), had actively lobbied to block the rule's implementation. IWLA, whose members hire for a large number of entry-level jobs, said the regulations will raise costs, hurt job growth, and would stifle efforts to achieve upward mobility, a characteristic the public warehousing segment is traditionally known for. At press time, the group did not return an e-mail request for comment

There has also been speculation that the incoming Trump Administration would reverse the rule on the grounds that it would be bad for business.