A major reform for federal overtime pay rules was blocked by a Texas judge just before it was set to go into effect last week, handing a gift to the incoming Trump administration by allowing millions nationwide to work extra time without extra compensation.
The Obama administration sought to adjust the eligibility threshold for overtime pay for low-income salaried workers, who have historically been exempt from the standard 50-percent wage premium for hours worked over the standard 40-hour week. Currently those earning as little as $23,660 annually—in the range of frontline fast food workers, well below the estimated living wage in California and New York—are ineligible for overtime. Essentially. they might end up working longer than their lower-ranked waged coworkers and be paid less per hour. Under the Labor Department’s new rule, salaried workers earning up to $47,476 a year, or about $900 a week, could earn additional overtime pay.
But Federal District Judge Amos Mazzant struck down the measure. Although the reforms aim simply to update rules based on standard protections for those who work excess hours, the court concluded such regulatory changes should be based on types of work, rather than on levels of compensation, and should be addressed through Congress, not the Department of Labor, lest this effort to remedy years of shorting workers on their wages cause their industry “irreparable harm.” The Labor Department now plans to appeal the injunction, which effectively blocks an estimated $570 million in extra earnings in 2017.
Labor advocates argue that over the years, both the classification rules and compensation levels of the existing overtime regulations have been dramatically distorted by legal manipulation and eroded by structural inequality. Denouncing the narrow ruling as “hostile” to the spirit of fair pay laws, Ross Eisenbrey, vice president of the Economic Policy Institute (EPI), argues that the court “considers it a ‘harm’ that employers will have to pay millions of employees for overtime hours while dismissing the benefit of higher salaries and more humane workweeks for workers.”
The guiding concept of “a fair day’s work for a fair day’s pay” in the Fair Labor Standards Act’s overtime provision was balancing time and wage value. By capping the standard workweek at 40 hours and setting a baseline wage, the government provided a regulatory framework to promote a healthy level of employment across the workforce, along with a foundation of economic security to protect individuals against getting overworked. Overtime penalizes bosses for making people work excessively by curbing the incentive to drive impoverished workers to exhaustion. But today, despite an era of soaring corporate profits, outdated overtime rules cover a smaller share of the workforce than they did in the 1970s.