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Federal judge halts overtime wage reform

[JURIST] A judge for the US District Court for the Eastern District of Texas [official website] on Tuesday issued a preliminary injunction [opinion, PDF] blocking an overtime reform rule that was to be implemented next week. The overtime rule [materials], passed under the Fair Labor Standards Act (FLSA) [text, PDF], would raise the ceiling for those seeking to receive overtime compensation from a yearly income of $23,660 to $47,500. The regulation, promulgated by the Department of Labor (DOL) [website], was to go into effect December 1. The court found that the regulation went beyond [AP report] the DOL's scope of authority and would cause irreparable harm if implemented.

In May the White House announced [Business Insider report] that the DOL would raise the salary threshold for overtime pay to $47,476 a year or $913 a week. The "new Overtime Rule," as it is referred to by challengers, was promulgated by the DOL and its Wage and Hour Division to update salary and compensation standards as well as to provide guidelines for determining who qualifies for exemption from from the FLSA minimum wage and overtime pay protections. The regulation raises the bar for exemption by doubling the baseline salary requirement and implementing a "duties test." The change has widespread implications [Forbes report] for businesses and nonprofits that must either raise wages for employees or pay overtime compensation. The Obama administration has maintained that the new rule will improve the lives of workers while businesses and Republicans have criticized [SHRM report] the rule stating that it will "hurt the lowest paid American workers the most." In June the US Supreme Court ruled [JURIST report] in Encino Motorcars v. Navarro [SCOTUSblog materials] that it could not rely on the DOL's interpretation of a statute on overtime pay, sending the case back to the lower court. In September Texas and Nevada filed suit [JURIST report] on behalf of 19 other states against the DOL challenging the regulation.

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