4 Million Workers Just Lost Overtime Pay (For Now)

4 Million Workers Just Lost Overtime Pay (For Now)
4 Million Workers Just Lost Overtime Pay (For Now)

A Texas judge has issued a preliminary injunction against Pres. Obama’s new overtime rule that promised 4 million salaried employees overtime pay. In the wake of the court’s decision, one has to wonder whether the new rule was just another political stunt by the lame duck administration or an attempt to help working people.

It’s no secret that the Obama Administration did not feel beholden to Congress. The outgoing president spent eight years circumventing lawmakers by penning executive orders en masse and instructing government agencies such as the Department of Labor to unilaterally change federal regulations. The overtime rule was one in a long line of such executive power grabs.

OT Rule Put On Hold
Twenty-one states, joined by the U.S. Chamber of Commerce, National Retail Federation, and other organizations, petitioned a federal court to block the O.T. rule, arguing the Obama administration had overstepped its authority. On Nov. 22, U.S. District Judge Amos Mazzant sided with the states. The effect of his order puts the new overtime rule on hold while Obama and the Dept. of Labor weigh their options.

If the rule had taken effect on Dec. 1, it would have theoretically made more than 4 million salaried employees eligible for overtime pay. It doubled the overtime threshold from $23,660 to $47,476. But, in many respects, the method and rule highlight just how naïve the Obama Administration was about business.

With the judge’s ruling coming in the 11th hour, many businesses had already devised plans to comply. Some whose employees were close to the new the $47,476 mark simply planned to bump up paychecks. That is not to say that a few additional hours wouldn’t come with that extra money.

Many companies, particularly in the fast food and retail industries, would have demoted entry-level managers back to hourly status — potentially stripping them of other benefits. For these companies to maintain a static bottom line, minimum wage employees would have filled in any gaps. Basically, aspiring managers would likely lose a foothold into better paying white collar careers.

On the corporate side, the National Federation of Independent Businesses reported that the change would negatively affect more than 5.5 million small businesses. But, with the rule in limbo, the legal and political implications seem to be that the new overtime rule is dead in the water.

GOP To Nix Obama Regs
Whether Judge Mazzant based his decision on legal scholarship or the practical knowledge remains to be seen. It was widely reported that the incoming GOP-led Congress planned to send this and many other of Obama’s unilateral regulations to the slaughterhouse. The Republicans plan to assert the Congressional Review Act and reach back 60 working days to strike down about 150 of Obama’s late-game rules changes.

Undoubtedly, the overtime rule would be lumped into a single measure that would be sent to the Oval Office for the soon-to-be President Trump’s signature. Given that employers would have had to make wholesale changes just to undo them later, Judge Mazzant’s order shows a practical wisdom that allows the incoming Congress and Trump Administration an opportunity to decide its fate.

Team Trump: To Act Or Not To Act?
During the campaign, reporters asked Trump his position on the change. His response was indifferent and he only indicated a concern to protect small businesses. Given the billionaire real estate mogul’s knowledge about corporate bottom lines and labor, it’s more likely than not that he understands how many businesses would adjust. As a matter of pragmatism, Trump can instruct the Department of Labor to simply drop participation in the lawsuit and agree to let Judge Mazzant’s stand without appeal. For all intents and purposes, Trump and Congress can now strike down the new O.T. rule without lifting a finger.

At the end of the day, the battle over the O.T. rule stands as a prime example of the divisive trench warfare between the Obama Administration and Congress during the last eight years. Unfortunately, the American worker has been needlessly caught in the crossfire…again.

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