Next Nail In The Coffin: Overtime Rule Struck Down By Judge

Under the terms of the proposed rule, salaried employees earning up to $47,476 a year, or $913 a week, would have been automatically eligible to receive time-and-a-half pay when they worked more than 40 hours a week, regardless of whether they performed executive, administrative, or professional duties.

Mazzant’s ruling isn’t much of a surprise given his previous rebuke of the rule when grating a November 2016 emergency injunction that halted the intended December 1 effective date on a nationwide basis. (Slip 14.) “Nor does the Department have the authority to categorically exclude those who perform “bona fide executive, administrative, or professional capacity” duties based on salary level alone”. The Plano Chamber of Commerce and more than 55 other business groups had filed a lawsuit challenging the rule, which was consolidated with a similar challenge brought by the State of Nevada and 20 other states.

“I applaud Judge Mazzant’s decision to permanently invalidate this Obama-era overtime rule that would have would have imposed millions of dollars of unfunded liabilities on the states and resulted in a loss of private sector jobs as well as onerous financial and regulatory burdens on small businesses in Nevada and around the country”, Laxalt said.

The Labor Department past year had appealed Mazzant’s decision temporarily blocking the Obama administration rule, weeks before President Donald Trump took office.

The court also denied a request filed by the Texas AFL-CIO to take over the defense of the rule.

Retailers and restaurants had been watching the court case closely.

The decision came after the same judge a year ago blocked the rule from taking effect pending his final decision.

The Court clarified that “the Department has the authority to implement a salary-level test” and that the summary judgment ruling “is not making any assessments regarding the general lawfulness of the salary-level test or the Department’s authority to implement such a test”.

Mazzant, an Obama appointee, though, said the Labor Department improperly looked at salaries instead of job descriptions when determining whether a worker should be eligible for overtime pay, according to The Hill newspaper. He concluded that the new salary-level test did not give effect to Congress’s intent because, by more than doubling the previous minimum salary level, it would “essentially make an employee’s duties, functions, or tasks irrelevant if the employee’s salary falls below the new minimum salary level”.

He also noted that the automatic updating mechanism that meant to adjust the minimum salary level every three years was similarly unlawful, and struck that portion down as well. However, it is quite likely that the USDOL will emerge from this process with a more moderate minimum salary test in place.

Second, the 5th Circuit Court of Appeals is scheduled to hear oral arguments on the appeal from Judge Mazzant’s November injunction in the coming weeks. Where the parties and the appeals court will stand with respect to that pending motion is unclear in light of today’s lower court decision. The rule had also raised the overtime eligibility threshold for highly compensated employees to around $134,000.

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