On Tuesday, November 22, U.S. District Judge Amos Mazzant in Sherman granted a nationwide injunction against the new Department of Labor overtime rule, which extends overtime pay to about 4.6 million workers nationwide and was set to go into effect on December 1. It is not known whether the injunction will permanently block the rule change, but it does block the December 1 mandatory implementation.
Mazzant agreed with the coalition of business groups, including the Plano Chamber, U.S. Chamber, Texas Association of Business, and more than 50 business organizations throughout Texas, who filed a lawsuit on September 26. The Plano Chamber was lead plaintiff in the lawsuit. In addition to the suit, Texas and 20 other states filed a separate challenge reinforcing the range of entities that will have severe problems complying with this regulation.
Jamee Jolly, Plano Chamber President/CEO, explained that the doubling of the minimum salary threshold will have significant adverse effects on businesses, nonprofit organizations and associations.
“The new overtime rule will limit workplace flexibility, impede career and promotion opportunities, and will make it harder for businesses and nonprofits to expand to meet the needs of their customers and constituents, in addition to imposing significant new economic costs,” she said.
The new rule would more than double the salary threshold for workers to qualify as exempt from overtime pay requirements. The threshold would drastically increase from $455 to $913 per week, or from $23,660 to $47,476 per year.
Judge Mazzant said that in issuing the rule, the Department of Labor “exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary threshold such that it supplants the duties test.”
Art Lambert, a labor and employment attorney in the Dallas office of Fisher Phillips, told the Dallas Business Journal in an interview that he was “stunned” by the legal opinion. Lambert said he expects the Department of Labor to appeal Mazzant’s decision to the Fifth Circuit Court of Appeals, and ultimately expects the matter to land in the hands of the U.S. Supreme Court.
U.S. Chamber of Commerce Senior Vice President of Labor, Immigration, and Employee Benefits Randy Johnson issued the following statement on Tuesday:”We are very pleased that the court agreed with our arguments that the Obama administration’s new overtime rule was unlawful and stopped rule from taking effect on December 1. If the overtime rule had taken effect, it would have resulted in significant new costs – more than $1 billion according to the Congressional Budget Office – and it would have caused many disruptions in how work gets done.”
The Plano Chamber will continue to monitor the injunction and future rules impacting businesses.