A federal judge this week granted an injunction against a Department of Labor rule that would extend overtime pay to about 4.6 million workers.
The rule was set to go into effect Dec. 1. It’s unknown whether the injunction will permanently block the rule change, but it does block the Dec. 1 mandatory implementation.
U.S. District Judge Amos Mazzant in Sherman agreed with a coalition of business groups, including Collin County-area chambers of commerce, the U.S. Chamber, Texas Association of Business, and more than 50 business organizations throughout the state that agreed businesses would be severely impacted by the overtime rule.
The new rule would increase minimum salaries from $455 to $913 per week or, from $23,660 to $47,476 per year, in order to exempt workers from overtime pay requirements.
Jamee Jolly, president of the Plano Chamber of Commerce, said that if the minimum salary threshold was doubled, it would have significant negative effects on businesses, nonprofit organizations and associations.
"The new overtime rule will limit workplace flexibility, impede career and promotion opportunities, and will make it harder for businesses and nonprofits to expand to meet the needs of their customers and constituents, in addition to imposing significant new economic costs," she said.
According to the Metrotex Association Realtors, the median household income for Dallas County residents and Collin County residents is $55,00 and $86,634, respectively, so the overtime rule would likely bring residents closer to a living wage.
However, according to Randy Johnson, U.S. Chamber of Commerce senior vice president of Labor, Immigration, and Employee Benefits, said, “If the overtime rule had taken effect, it would have resulted in significant new costs – more than $1 billion according to the Congressional Budget Office – and it would have caused many disruptions in how work gets done."
So, basically, it comes down to paying employees more or having fewer employees. It’s the proverbial “double-edged” sword: Workers deserve to be paid for their work, but financially, several small businesses cannot afford to pay employees the time-and-a-half rate.
Many businesses in the Dallas-Fort Worth area had already begun the process of adjusting to the coming change.
G&A Partners, a human resources outsourcing company, worked with several small businesses across the state – companies with 250 employees or fewer.
“It is a huge jump from the current minimum,” noted Starr Harry, client advocate with G&A Partners. “That’s a significant financial impact” for small businesses.
In preparation for the rule change, G&A worked with company executives on analyzing their employees’ job duties, which are directly tied to their exempt or non-exempt status.
G&A representatives encouraged employers to be transparent with their staff through this process, particularly now as the ruling is in limbo. Employers that already implemented payroll changes based on the new rule should be careful of reversing those changes, Harry said.
Judge Mazzant said in his ruling the Department of Labor "exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary threshold such that it supplants the duties test.”
Some local attorneys expect the Department of Labor to appeal Mazzant's decision to the Fifth Circuit Court of Appeals, and for the case to ultimately land in the U.S. Supreme Court.
Staff writer Kelsey Samuels contributed to this report.