Home Economic Development Federal court in Texas blocks Obama-led plan to extend overtime

Federal court in Texas blocks Obama-led plan to extend overtime

A federal overtime regulation that would have made an estimated 4 million more American workers eligible for overtime pay was blocked in federal court Nov. 22, a blow to a labor effort pushed by President Barack Obama.

The rule, set to take effect Dec. 1, would have required most salaried workers earning up to $47,476 a year receive time-and-a-half pay when they work more than 40 hours a week, more than double the current overtime threshold of $23,660.

A ruling by the U.S. District Court in the Eastern District of Texas granted a nationwide preliminary injunction against the rule. U.S. District Judge Amos Mazzant III sided with a coalition of 21 states, led by Nevada, that said the new Department of Labor’s rules exceed the federal agency’s authority.

When the new labor rule was announced, Obama described it as “one of the single most important steps we can take to help grow middle-class wages.” Now it is unlikely the rule will take effect before President-elect Donald Trump takes office. Trump criticized regulations from Obama often while on the campaign trail.

In a statement, the Labor Department said the decision was “delaying a fair day’s pay for a long day’s work for millions of hardworking Americans.”

The new rule received mixed reviews in Westchester and Fairfield counties when it was first announced in May.

Related: Overtime rule corrects abuses but challenges payrolls

The overtime rules would have affected 982,000 workers in New York and 113,000 in Connecticut, according to estimates from the Economic Policy Institute, a Washington think tank.

Both The Business Council of Westchester and Connecticut Business & Industry Association said at the time that the rule could end up hurting both employees and employers.

“If employers keep getting these things placed on their back they will have to make some tough decisions,” John Ravitz told the Business Journal in May. Ravitz is the executive vice president and CEO of The Business Council of Westchester.

That stance put the local business groups in line with national ones. The U.S. Chamber of Commerce was a vocal opponent of the overtime regulations, and released a statement applauding the decision.

“If the overtime rule had taken effect, it would have resulted in significant new costs – more than $1 billion according to the Congressional Budget Office – and it would have caused many disruptions in how work gets done,” the chamber said.

The Labor Department said it is considering all legal options.

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