A federal judge in Sherman, Texas, has issued a nationwide preliminary injunction blocking the implementation of new Obama Administration “white collar” exemption rules.
The new rules were set to take effect on December 1, and would have expanded by more than four million the number of American workers entitled to receive overtime pay. The Department of Labor has estimated that the change would automatically extend overtime pay provisions — and nullify existing exemptions — for more than 4.2 million workers in the first year of implementation, and an additional 3.9 million in the second year.
In a 20-page decision, U.S. District Judge Amos L. Mazzant III ruled on October 22 that Nevada and 20 other states (not including Florida), and more than 50 business groups, that had sued to block the new rules appeared to him to have a significant chance of ultimate success in their lawsuit, and that they would suffer serious financial harm if the rule went into effect as scheduled.
“The Court finds the public interest is best served by an injunction,” Judge Mazzant wrote in his opinion.
Judge Mazzant, 51, a 2014 Obama appointee to the federal bench, made a preliminary finding that President Obama’s Labor Department acted illegally by raising the salary cap below which all workers must receive overtime pay from $455 a week to $921 a week or $47,892 a year, a big jump from the current $23,660. He found that the changes contained in the new rules, including an automatic indexing mechanism for the threshold minimums, should have been made by law by Congress, by amending the Fair Labor Standards Act, and not by executive branch rules.
The injunction halts enforcement of the rules throughout the United States unless the government can win an appeal to the United States Circuit Court of Appeals for the Fifth Circuit in New Orleans or the U.S. Supreme Court. If the government does appeal while Obama remains in office, it is possible that the appeal would be discontinued once Donald Trumps is sworn in as the new president on January 20.
The state government plaintiffs successfully argued that if allowed to go into effect the new rules would harm the public by increasing state budgets, causing layoffs, and disrupting governmental functions.
