In good news for employers across the country, a Texas federal judge last week struck down a U.S. Department of Labor rule that likely would have forced millions of workers to be converted from salary to hourly employees. In the ruling, the judge – Obama-appointee Amos Mazzant, who originally put the rule on hold last November – wrote that the agency improperly looked at salaries instead of job descriptions when determining whether a worker should be eligible for overtime pay.
The overtime rule, which was set to go into effect on Dec. 1, 2016, would have required employers to pay overtime to most workers who earn less than $47,476 annually – a much higher threshold than the current salary limit of $23,660. The rule drew the ire of the U.S. Chamber, PA Chamber and business advocates nationwide and led several of these groups to file suit against the administration. Employer advocates cited the impact the rule would have on many employers who would be forced to cut hours and hire fewer workers in order to absorb significantly higher operating costs, as well as the impact on employees, many of whom could be converted to hourly workers with less flexibility and fewer benefits.
Following the ruling, U.S. Chamber President and CEO Tom Donohue released the following statement: “Today’s decision is another victory for the effort to free our economy from the regulatory stranglehold of the last eight years. We have consistently said that the last administration went too far in its 2016 overtime rule, and we are pleased that Judge Mazzant granted a final judgment that makes permanent his previous ruling against the overtime rule.
“This means that small businesses, nonprofits, and other employers throughout the economy can be certain that the 2016 salary threshold will not result in significant new labor costs and cause many disruptions in how work gets done. The Obama administration’s rule would have resulted in salaried professional employees being converted to hourly wages, reduced workplace flexibility and remote electronic access to work, and halted opportunities for career advancement.
“We look forward to working with the Department of Labor on a new rule to develop a more appropriate update to the salary threshold.”