Texas judge halts overtime rule implementation

The decision says the department is in no position to impose salary levels

Non-Profits & Charities

By Allie Sanchez

A Texas judge granted a preliminary injunction that will block the implementation of the US Department of Labor’s new overtime rules which was set to take effect this week.

The new overtime rules, released this May, are expected to affect exempt and non-exempt employees.

According to the Non-Profit Times, the rules will affect around 4 million workers; however, authorities have yet to quantify the number of non-profit employees that will be hit by the labor department’s new regulations. Quoting the US Bureau of Labor Statistics, the Non-Profit Times said the sector accounted for more than 11 million jobs in 2012, which represents around 10% of the US workforce.

A coterie of business groups opposed the proposed overtime rules, including the US Chamber of Commerce, and 21 states fought to have the rules suspended in the US District Court-Eastern District of Texas in Sherman, Texas. District Judge Amos Mazzant said that his decision is based on the finding that the labor department does not have authority to impose new salary levels, as reflected in the new overtime rules.

“Congress gave the Department the authority to define what type of duties qualify — it did not give the Department the authority to supplant the duties test and establish a salary test that causes bona fide EAP’s to suddenly lose their exemption ‘irrespective of their job duties and responsibilities,’” the decision read. EAPs refer to employees who occupy executive, administrative or professional positions.

The report said a Department of Labor spokesperson gave the following statement in response to the decision, “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. We are currently considering all of our legal options.”

Randy Johnson, the U.S. Chamber of Commerce’s senior vice president of labor, immigration, and employee benefits, said in the report, “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. Furthermore, the rule would have reduced workplace flexibility, remote electronic access to work, and opportunities for career advancement. This is a great result.”
 

Related Stories:
Will the DOL’s new overtime rule hurt the insurance industry?
Opinion: An agent's place in the complex world of E&O insurance

Keep up with the latest news and events

Join our mailing list, it’s free!