A Texas federal court judge has struck down a rule change by Obama’s Labor Department that would have cost employers $1.2 billion a year by requiring overtime for an additional 4.2 million workers — or in reality, however many workers actually still had jobs after the costs were imposed.
The legal challenge was spearheaded by Nevada Attorney General Adam Laxalt on behalf of 21 states and a number of business entities.
The overtime rule change would have increased the minimum salary level for employees exempt from overtime — due to being engaged in executive, administrative or professional duties, so-called EAP workers — from $23,660 a year to $47,476.
U.S. District Judge Amos Mazzant of Sherman, Texas, this past week ruled the salary qualification increase violated the clear intent of Congress when it passed the Fair Labor and Practices Act in 1938, which established minimum wages and required time-and-a-half overtime pay for hourly workers who work more than 40 hours a week. EAP employees were exempted from overtime requirements.
Judge Mazzant wrote, “This is not what Congress intended with the EAP exemption. Congress unambiguously directed the Department to exempt from overtime pay employees who perform ‘bona fide executive, administrative, or professional capacity’ duties. However, the Department creates a Final Rule that makes overtime status depend predominately on a minimum salary level, thereby supplanting an analysis of an employee’s job duties.”
He said nothing in the law allows the Labor Department to make salary rather than an employee’s duties determinative of whether an employee should be exempt from overtime pay.
“I applaud Judge Mazzant’s decision to permanently invalidate this Obama-era overtime rule that would have imposed millions of dollars in unfunded liabilities on the States and resulted in a loss of private sector jobs as well as onerous financial and regulatory burdens on small businesses in Nevada and around the country,” said Laxalt in a press release. “My office is proud to have led the charge towards a final ruling that brings clarity, certainty, and closure to the business community and government alike.”
Additionally, Nevada’s senior Sen. Dean Heller, who has been challenging the overtime rule since it was proposed, put out a press release stating, “The former Obama Administration’s expansion of the federal overtime rule would have devastated Nevada’s business owners and job creators. Since the rule was issued last year, I have been strongly concerned about its impact because it would fundamentally change how employers compensate their workers, reducing Nevadans’ work hours and benefits. I’m pleased to see that a federal judge acknowledged the regulation’s harmful consequences and ruled it invalid today.”
Heller also commended Laxalt for leading the fight against the overtime rule change.
In addition to Nevada, the other states challenging the overtime rules were Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah, and Wisconsin. Missouri, Colorado, Montana, and Wyoming filed a friend of the court briefs backing the challenge.
In June, Trump’s Labor Department announced that it too wants salary level to count in deciding who is eligible for overtime pay, but it did not endorse the Obama administration’s salary level. The Labor secretary should heed Mazzant’s reasoning and the clear language of the law as it is currently written. If any changes are contemplated, they must be voted on by Congress.
This effort on behalf of Nevada’s state and local government employees, as well as countless businesses, was well worth the time, effort and expense to save jobs and businesses. — TM