Judge Blocks Law Extending Overtime Pay - Garcia-Martin & Martin, P.C.

A federal judge in Texas recently issued an emergency injunction against a rule extending overtime pay for certain workers. The Department of Labor (DOL), along with President Obama, issued a final rule that would increase overtime pay for more than 4 million U.S. workers within the first year it is implemented. U.S. District Judge Amos Mazzant heard arguments against the rule, which is supposed to be implemented by December 1^st, and issued a ruling that will at least temporarily stop implementation.

What the Overtime Rule Does

The new rule will make the following adjustments to overtime pay:

Raise the standard salary threshold in the lowest-wage region, from $455 to $913 per week, or $23,660 to $47,476 per year;
Increase annual compensation for highly compensated employees (HCE) from $100,000 to $134,004 per year; and
Include a provision that will automatically raise the salary threshold every three years.

The rule would affect around 370,000 Texas workers.

What This Means for Businesses

Businesses and non-profit organizations oppose the bill because it will cause a significant increase in their employment costs. They would be required to pay time-and-a-half to employees who work more than 40 hours in a week and who also make less than $47,476 annually. Smaller businesses worry they will suffer immensely from the higher costs and be forced to demote employees from salary jobs to hourly positions, which would have a negative effect on employee morale. Texas Association of Business (TAB) President Chris Wallace said the rule did not take into consideration the varying effects it would have on different businesses.

Two lawsuits were filed against the rule. The first was filed by over 50 business organizations (including the U.S. Chamber of Commerce and the TAB,) and the second was filed by 21 states (including Texas.) These suits, which were consolidated, claim the rule is unlawful, saying Congress never intended to set thresholds or automatic increases to these thresholds.

Judge Mazzant agreed with the lawsuit and temporarily stopped the rule from being enacted on December 1^st while he decides how to challenge the rul’s requirements. DOL “strongly disagrees” with the judge’s r ruling, saying that it has once again effectively stopped employees who work long overtime hours from getting fair pay. The Department has pointed to its history of raising the minimum wage, saying it uses three test methods that works together to calculate employee salary levels. DOL claims that it is working with Congress, attempting to help Congress enforce overtime exemptions for white collar workers. DOL is preparing to fight the judge’s opposition, and is considering its legal options.

Contact an Experienced Texas Employment Law Attorney

Garcia-Martin & Martin, P.C., is a business and employment law firm in Sugar Land, Texas. We offer a variety of employment law services for business and employees, including advice on noncompetes, overtime claims, severance packages, discrimination in the workplace, and much more. We have represented many businesses in the Houston metro area. For help with your employment law matter, call us today at (281) 277-3066.