A Texas judge blocked President Obama's bid to expand overtime pay protections to millions of Americans on Tuesday, thwarting a key presidential priority just days before it was set to take effect. The Labor Department rule would have doubled the salary level at which hourly workers must be paid extra for overtime pay, from $23,660 to $47,476. Siding with business groups including the U.S. Chamber of Commerce, Texas District Judge Amos L. Mazzant III halted it. The rule, finalized in May, represented the first such change in more than a decade and was hailed at the time as the most consequential action the Obama administration could take for middle-class workers without congressional involvement. Plaintiffs had argued the Labor Department acted beyond its authority under the Fair Labor Standards Act.
"A single judge in Texas has ignored 78 years of legal precedent and taken money out of the pockets of millions of working people across the country by blocking the long overdue update of the overtime rule," Emily Martin, vice president for workplace justice at the National Women's Law Center, said in a statement Wednesday. "These workers, the majority of whom are women, earn modest salaries, work long hours, and have just been told that they will still be denied fair pay."
The National Retail Federation said about one-tenth of salaried employees newly eligible for overtime will probably receive raises high enough to lift them above the 47,500 threshold. They will make more money, but won't qualify for overtime pay. Managers paid more than the threshold are ineligible because they fall under the so-called white-collar exemption that excludes supervisors and professionals from overtime.
FILE - In this May 6, 2016, file photo, President Barack Obama speaks in the briefing room of the White House in Washington. Roughly 5 million more U.S. workers will soon become eligible for overtime pay under new rules issued by the Obama administration. The policy changes would benefit many salaried employees in the fast food and retail industries who often work long hours, are called managers, but are paid just above the current 23,660 annual threshold that allows companies to deny overtime pay.
On Tuesday morning, the Dallas Federal Reserve released its monthly manufacturing outlook survey, which came in far lower than expected, at -20.8. Quite a few companies cited the new Department of Labor overtime rule that makes more salaried workers eligible for overtime pay as a future headwind for their businesses, many of which are still reeling from the collapse in oil prices. One company said its younger employees don't deserve overtime pay because they slack off far too much through the regular workday. "We have a serious productivity problem with office workers and estimated that less than 50 percent of their time is spent on value-creating business activities," wrote one respondent. "The younger workers are often off task, engaged on social media, on the internet, texting on phones and other unproductive activities."