What Marketers Get From a Stopped Overtime Rule
Today, employers were supposed to start paying time-and-a-half to employees who put in more than 40 hours a week and earn less than $47,476 a year. But with just over a week remaining until it was set to go into effect, a federal judge in Texas issued a nationwide injunction against the Obama administration policy that would’ve expanded overtime-pay eligibility to some 4 million workers.
The Labor Department regulation was part of the legacy that President Barack Obama was hoping to leave behind.
"The rule was one of the administration's most far-reaching efforts to boost pay for workers at the lower end of the income ladder,” NPR White House Correspondent Scott Horsley said on the news organization’s website. “It's one of many Administrative actions that was already facing the threat of reversal from the incoming Trump Administration."
According to NPR, U.S. District Judge Amos Mazzant III sided with plaintiffs in a case that claimed the new rule would have caused an “uptick in government costs in their states and make it mandatory for businesses to pay millions in additional salaries.” The concern among business owners and industry groups is that the rule changes would have eventually led to layoffs.
The new rule was already in jeopardy after the results of the election, which put Republicans soundly in charge of both houses of Congress, as well as the White House.
In response to Judge Mazzant’s decision, the labor department said, “We strongly disagree with the decision by the court, which has the effect of delaying a fair day's pay for a long day's work for millions of hardworking Americans. The department's overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options."
The rule, which has been delayed, revised and pushed back over the course of the last several years now, was intended to spark to life slow-growing U.S. wages. But businesses — particularly small business owners — were concerned about what the rule would do to their bottom lines.
In a statement, the National Retail Federation applauded the decision.
“The Labor Department’s overtime changes are a reckless and aggressive overreach of executive power, and retailers are pleased with the judge’s decision,” said NRF SVP for Government Relations David French. “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. 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.”
Aside from the direct impact on businesses themselves, NRF cited data from the Congressional Budget Office — a nonpartisan entity — that said the overtime changes would have resulted in price increases on products across nearly every industry, so businesses could offset the costs associated with the rule changes.
NRF was one of more than several dozen organizations listed on the lawsuit that was brought against the Labor Department seeking the injunction.
With President-elect Donald Trump's inauguration set for January, it was likely the rule would’ve only been in effect for several weeks. But now that the injunction is in place, the chances that the overtime rules ever see the light of day may be incredibly slim. But, like everything policy- and Trump-related, we’ll have to wait and see where this goes.