The Obama Administration’s controversial new overtime rule is on hold as a court battle plays out and President-elect Donald J. Trump has so far been unclear about exactly where he stands on the policy that would make roughly 4 million additional workers eligible for overtime pay. While some believe Trump will scrap the rule, his comments have been a bit ambiguous.
Under the Labor Department’s proposed rule, which has been blocked by a federal judge in East Texas, employers would be required to pay time-and-a-half to employees who work more than 40 hours each week and earn less than about $47,000 per year. The new threshold is roughly twice what the government currently allows for workers to be exempt from overtime.
Late last week, the Department of Labor filed a notice of appeal at the U.S. District Court for the Eastern District of Texas. It was the same day the rule would have gone into effect had there not been a legal challenge.
21 states and some business groups are fighting the rule. Texas Attorney General Ken Paxton, along with the AG of Nevada, have taken the lead on the legal opposition.
“Once again, President Obama is trying to unilaterally rewrite the law,” Paxton said. “This time, it may lead to disastrous consequences for our economy. The numerous crippling federal regulations that the Obama administration has imposed on businesses in this country have been bad enough,” Paxton said. “But to pass a rule like this, all in service of a radical leftist political agenda, is inexcusable.”
Dallas Morning News Business Columnist Mitchell Schnurman argued Paxton's comments are terribly uninformed. “If Texas can handle $40 oil, it can adjust to a real 40-hour workweek, too. Employers can pay extra for the OT hours, raise managers’ salaries to the new threshold or give workers more time off,” Schnurman said.
John Patrick, the President of the Texas AFL-CIO said Paxton and the state’s Republican leadership should reverse course.
“Because of inflation, the existing overtime rule forces salaried workers who are barely making ends meet to give up large chunks of their lives in overtime work that doesn't net them an extra nickel,” Patrick said in a prepared statement. “Working families need much more than a fix for the discarded overtime rule,” Patrick said. “A good place to start would be a meaningful increase in the minimum wage, a family leave law, an equal pay law and other measures that raise wages and living standards, rather than decimate them.”
The lawsuit can be seen here.
No matter what happens in court, the rule’s future is far from certain.
President-elect Trump rode a populist wave to power in the November elections, surprising many political observers with upset wins in states where working-class voters would welcome additional overtime benefits: Michigan, Wisconsin, and Pennsylvania.
The rule, however, was not a central theme in the campaign so Trump has some wiggle room. When asked about it in August, then-candidate Trump mainly talked about exemptions for small business owners but punted on the overall policy.
“We have to address the issues of over-taxation and over-regulation and the lack of access to credit markets to get our small business owners thriving again,” Trump said. “Rolling back the overtime regulation is just one example of the many regulations that need to be addressed to do that. We would love to see a delay or a carve-out of sorts for our small business owners.”
