Texas judge blocks new overtime law; what it could mean for local businesses

Business associations and state officials voice concern about updated U.S. Department of Labor regulations.

Business associations and state officials voice concern about updated U.S. Department of Labor regulations.

The Sherman Division of the U.S. District Court Eastern District of Texas granted a preliminary injunction against the new federal rule that would update the overtime threshold across the country, extending overtime protection to more than 4 million salaried workers nationwide. As a result, the rule will not take effect Dec. 1—as anticipated—anywhere in the nation. Here's what local employers and employees need to know about the ruling:

• Judge Amos Mazzant made the ruling Tuesday afternoon. According the the injunction, the court ruled the Department of Labor does not have the statutory authority to apply the rule. The injunction states that Congress, not the department, has the authority to update the overtime threshold.

• The overtime rule change was made at the behest of President Barack Obama to address the effect of economic inflation since the rule’s last update in 2004.

• Under the new rule, most salaried workers who earn $913 or less per week—or $47,476 annually—would be entitled to overtime compensation at 1.5 times the hourly rate.

• Two lawsuits were filed against the overtime threshold update. The first was filed by more than 50 business organizations, including the U.S. Chamber of Commerce and the Texas Association of Business. The second lawsuit was filed by 21 states, including Texas. The lawsuits were later consolidated.

• If implemented, the rule would apply to approximately 370,000 workers in Texas.

• Opponents of the rule argued that it would force many state and local governments, as well as private businesses, to substantially increase their employment costs. TAB President Chris Wallace said the rule also did not consider the varying effects it would have on different industries.