Pending final decision, retailers and small business owners can take a sigh of relief.
Providing some relief to retailers and small business owners, Federal District Judge Amos L. Mazzant III of the Eastern District of Texas has issued a nationwide injunction against the expansion of the new overtime regulations created by the Obama administration, according to the New York Times. The change was scheduled to take effect on December 1, and raised the salary threshold for overtime from $47,476 to $23,660. It impacts approximately 4.2 million workers nationwide, USA Today reported.
The suit was raised by 21 states and dozens of business groups that argued that the new rule would increase government costs in their respective states by $115 million dollars in 2017 alone and could decimate many smaller employers, Bloomberg reported.
In a statement, The Labor Department said that they “strongly disagree with the decision by the court,” This suggests that they might file an appeal. The injunction marks just a temporary measure, suspending the regulation until the judge can study the case and issue a ruling on its merits, and experts suspect that it is likely that he will ultimately strike down the regulation.
“There’s no question that this decision changes a number of different points of leverage over the future of the rule,” said David French, senior vice president for government relations at the National Retail Federation, which opposed the new rule. The NRF and other business organizations have said, however, that they are open to some increase in the limit, despite opposing the current legislation.
The National Retail Federation praised the court ruling, calling the blocked legislation "reckless" and an "aggressive overreach of executive power." As the largest private employer in the country with about 42 million jobs, the retail industry would be greatly affected by the workforce regulation.
“The rules are just plain bad public policy, and we are pleased that the judge is allowing time for the case to go forward before they can go into effect," David French, NRF senior vice president for Government Relations said in a press release. "We hope the judge ultimately finds in our favor, and in the meantime this timeout gives Congress a chance to take another look at the impact of these rules.”
In his ruling, Judge Mazzant suggested that the administration lacked the authority to establish a salary limit — which the Labor Department has raised repeatedly since Congress enacted the underlying legislation in 1938. Judge Mazzant did state in a footnote that he was not commenting generally on the legality of establishing a salary limit, however, but just the particular increase that the plaintiffs had challenged. “The court’s decision suggests that the Department of Labor has no authority whatsoever to regulate a salary minimum,” said Allan S. Bloom, of the law firm Proskauer Rose.
“This is a victory for small business owners and should give them some breathing room until the case can be properly adjudicated,” Juanita Duggan, CEO of the National Federation of Independent Business told USA Today. The organization is separately challenging the new overtime regulations.
