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Earlier this year President Barack Obama attempted to bypass Congress with a “rule change” in overtime pay regulations that would have cost U.S. employers more than $2 billion a year. A federal judge just stalled the change, which was slated to take place next week, making it likely that it will never become law.
Obama’s pen-and-phone regulation would have changed how U.S. employers are required to pay for overtime for around 4 million American employees earning between $23,660 and $47,476 per year hourly or on salary.
Currently, the overtime rules apply only to workers earning an annual salary of up to $23,660.
The Labor Department heralded the rule change as a boon to lower wage earners— but the contentious rule’s detractors in the business community contend that it would kill thousands of entry and mid-level jobs in a similar manner as minimum wage hikes not backed by market demand.
Others argued that the rule change would require employers who can’t afford additional overtime burdens to demand unreasonable productivity increases from covered workers during their regularly scheduled 40-hour workweeks.
According to the National Federation of Independent Businesses, small scale employers with the tightest budgets— 44 percent of whom employ at least one worker affected by the rule change— would have been hit the hardest.
Since the rule change was announced, U.S. employers have frantically been looking for loopholes, automation options to eliminate unnecessary employees and ways to track employee time down to the second.
The Tuesday injunction on the rule change from U.S. District Judge Amos L. Mazzant III of the Eastern District of Texas has many of those employers— as well as employees concerned about added scrutiny on their workplace performance— breathing a sigh of relief.
Mazzant’s order to halt the regulation for now wasn’t based on the laws merits but on Obama’s attempt to bypass the legislative branch via Department of Labor regulations.
“[T]he Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test,” Mazzano said. “The Department’s role is to carry out Congress’s intent. If Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change.”
Now, with it likely that the injunction will hold until Donald Trump takes office, the rule change Obama saw as one of his signature achievements is likely to disappear for good.
One of Trump’s main campaign platforms was the elimination of harsh regulations that make it difficult for Americans to start and run small businesses—and he has specifically addressed the overtime change in past interviews.
“Rolling back the overtime regulation is just one example of the many regulations that need to be addressed to do that,” Trump said in August. “We would love to see a delay or a carve-out of sorts for our small business owners.”
Well, here’s the delay. Now let’s hope the Trump administration and its Department of Labor is serious about scrapping this and hundreds of other unnecessary regulatory burdens on U.S. small businesses. If they leverage support from members of Congress eager to do the same, America’s economic revolution will begin on Main Street.