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Published: Sat, November 26, 2016
Economy | By Melissa Porter

Federal court blocks new overtime rule


A rule created to extend overtime pay to more than four million Americans was blocked by the federal court in Texas Tuesday night.

The rule crafted by the U.S. Department of Labor would have required overtime pay for about 4 million more administrative and professional workers, almost doubling the current salary threshold of roughly $23,660.

It would have prohibited Arkansas workers from becoming salaried until they earn more than $47, 000 dollars a year, but previously you could be put on salary making just over $23,000. The order comes after 21 states, including Kansas, sued to block the rule before it took effect on December 1.

But a U.S. district judge, Amos Mazzant, has ruled in favour of 21 states, which petitioned that the overtime change is unlawful, and placed a preliminary injunction on the law.

A lawsuit filed in September by Kansas and 20 other states challenged the new rule that would have more than doubled the minimum salary threshold below which overtime pay would be required.

Trump told the news website Circa in August that he hoped small businesses would get an exception from the overtime rule, although the issue was not a prominent presidential campaign theme.

Moreover, publishing what amounts to an automatic "update" to the minimum salary threshold is something that has never before happened in the more-than-75-year history of the FLSA exemptions. And to make clear this was no mere procedural squabble, he called the Labor Department action "unlawful".

Sarah Maloney, executive director of the Connecticut Restaurant Association, said her members were already taking action to be compliant with the December 1 deadline.

The current salary threshold covers an estimated 7 percent of full-time salaried workers, according to the DOL, down from 62 percent in 1975.

"This injunction means that the December 1 deadline for compliance with the new rules can not now be implemented or enforced by the Department of Labor", said Paychex president and CEO Martin Mucci.

They are challenging a Department of Labor Final Rule that would modify the Fair Labor Standards Act. "Depending upon what changes, if any, have been made, an employer could decide to continue with any changes that it implemented or may consider modifying or repealing proposed changes that have not yet been implemented".

The Labor Department says it's now considering its options, one of which would be to appeal the judge's injunction. Or Congress could amend labor laws. The move temporarily blocked the rule from taking effect and allows more time for litigation.

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