New overtime rule blocked by federal judge

A federal judge issued an injunction against President Barack Obama’s new overtime rule Tuesday, a major setback that delays one of the president’s significant reforms from going into effect next week as planned.

The president’s new rule would vastly expand overtime rights for people who work on salary, bringing new protections to an estimated 4 million workers. Businesses were expected to be compliant with the new rule by Dec. 1, but the ruling by a federal court in Texas grants them a reprieve.

The sweeping reform was already imperiled by Donald Trump winning the White House. With the rule now delayed, the Obama administration no longer has time on its side.

Under the law, hourly workers are automatically entitled to time-and-a-half pay when they work more than 40 hours in a week. But whether salaried workers are entitled to overtime pay depends on how much money they make and what their job duties are. The White House basically changed the rules to make them more generous to workers.

In a nutshell, salaried workers earning less than $47,476 per year will automatically be covered under the law with Obama’s reforms. Under the previous rule, only workers earning less than $23,660 were guaranteed overtime rights.

Business groups and Republicans in Congress have been fighting the changes since the White House first began considering them. On Tuesday, major lobbies for industries immediately hailed the judge’s ruling, while workers rights groups said it would delay much-needed reforms from taking effect.

Ross Eisenbrey, vice president of the Economic Policy Institute, called the ruling “extreme and unsupportable” and “a clear overreach.” “For 78 years the Department of Labor has used salary as well as duties to determine overtime eligibility,” Eisenbrey said in a statement. “Congress has amended the [law] many times and has never objected to the salary test.”

The National Association of Manufacturers, meanwhile, called it “an important win for all manufacturers in America.” 

The groups that sued to block the rule claimed officials at the Labor Department went beyond their statutory authority when they crafted it. The injunction merely delays the law while the case makes its way through court. The Labor Department said it is confident it was within its legal power when it made the changes.

But proponents hoped it would go into effect as soon as possible. If businesses were forced to adapt to the rule now, the thinking goes, Trump might be less likely to completely undo it after he takes the oath of office, as business groups and many Republican lawmakers might like to see him do.

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