A Texas judge blocked new US Department of Labor rules that would have made millions of American workers newly eligible for overtime pay as of Dec. 1.
Under the new rules, announced last year and championed by US president Barack Obama, employees making $47,476 a year (or $913 a week) would be eligible for overtime, a big jump from the previous threshold of $23,660 (or $455 a week). But the executive action has been challenged by 21 states and a coalition of more than 50 business groups, which argued the new salary level was arbitrary and that the government overstepped its authority.
Judge Amos Mazzant, an Obama appointee to the federal court in Sherman, Texas, agreed, ruling that salary level couldn’t be the only means for determining overtime. He granted an injunction today (Nov. 22), Reuters reported. The ruling can be appealed, but that appeal may be dropped once Donald Trump takes control of the White House.
The Department of Labor said it was considering its options. In an emailed statement, it said:
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 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.
The ruling is a blow not only to Obama’s legacy—which no doubt has suffered far worse in recent weeks—but also to millions of US workers, whose ability to earn overtime had been eroded over the years by new limits on what kind of work could be eligible for overtime.
“This is the single biggest step I can take through executive action to raise wages for the American people,” Obama said when the rules were finalized earlier this year. “It means that millions of hardworking Americans … will either get paid for working more than 40 hours, or they’ll get more time with their families. Either way, they win. The middle class wins. And America wins.”
About 4.2 million workers would be newly eligible for overtime, according to an analysis from the Economic Policy Institute, a Washington think tank. The group estimated 120,000 new jobs would be created by employees looking to avoid paying time-and-a-half to existing employees.
Other companies have given workers raises to lift them above the $47,476 level. Walmart’s entry-level managers, for example, will now make $48,500, instead of the $45,000, a move to pre-empt the new rules that would have made them eligible for overtime.
It was the first increase in the threshold since 2004, when the rules were last rewritten. Those changes, under US president George W. Bush, reclassified what work was exempt for overtime and were criticized by organized labor for removing 6 million workers from overtime eligibility.
This article has been updated with a statement from the Department of Labor.