WASHINGTON — The Department of Justice is appealing a federal judge’s preliminary injunction that stopped the Obama administration’s expanded overtime rules from taking effect on Dec. 1.
Justice officials filed a motion Friday for an expedited appeal on behalf of the Department of Labor, which is embroiled in a legal skirmish with several states and a coalition of more than 50 business groups that filed a lawsuit against the DOL and its leading officials in September.
The coalition, which includes the National Retail Federation, filed a lawsuit against the DOL, Labor secretary Tom Perez, and David Weil, administrator of the DOL’s wage and hour division, in the U.S. District Court for the Eastern District of Texas, charging that the agency overstepped its statutory authority in issuing the regulation and violated the Administrative Procedures Act.
The District Court later consolidated their suit with a separate suit filed by 21 states also challenging the overtime rules.
U.S. District Court Judge Amos Mazzant issued a preliminary injunction late last month temporarily barring the rule from taking effect.
“The department strongly disagrees with the decision by the court,” the DOL said. “The department’s overtime final rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule.”
The DOL’s new regulation, unveiled in May, will double the salary threshold of workers eligible for overtime pay to $47,476 a year from the current $23,660 a year.
The change in the salary threshold is expected to expand overtime pay and protection to an estimated 4.2 million workers who are currently not eligible under federal law. It is also expected to boost wages for workers by $12 billion over the next 10 years, according to the White House. The threshold will be tied to an index of salary growth and increase every three years.
Under the Fair Labor Standards Act, hourly wage workers are generally paid time-and-a-half for more than 40 hours a week if they earn below a certain salary, but a white-collar exemption has prevented many salaried executives, managers, supervisors and administrators from receiving overtime, according to the Obama administration. The threshold for overtime eligibility was set at $455 a week, or about $23,660 a year, in 2004.
Obama aimed to change that with his executive authority to lift the floor on overtime eligibility.
“If your salary is even a dollar above the current threshold, you may not be guaranteed overtime,” Obama said in 2014 when he issued a memorandum directing the Labor Department to update and simplify the rules. “It doesn’t matter if what you do is mostly physical work like stocking shelves, it doesn’t matter if you’re working 50 or 60 or 70 hours a week, your employer doesn’t have to pay you a single extra dime, and I think that’s wrong. It doesn’t make sense that in some cases this rule actually makes it possible for salaried workers to be paid less than the minimum wage.”
Business groups immediately raised concerns about the impact the rule will have on companies, with some arguing it would hollow out the middle-management tier. Retail experts cautioned at the time that companies will have to adjust to a dramatic change in the way they classify and pay their employees as they try to minimize the additional costs.
The coalition charged in the suit that by setting an “excessively high salary threshold” for determining who qualifies as “executive, administrative and professional employees,” the rule departs from the intent established by Congress in the FLSA and consistently administered by DOL for more than 75 years.
A provision to automatically update the salary threshold every three years without requiring the regular agency rule-making process or opening it to public comment is not authorized by the FLSA or any other statute, the suit argued.
Justice officials said in their motion Friday that the plaintiffs oppose expedition of the appeal . Citing “time sensitive reasons”, the agency asked the court to make a ruling on their motion by Dec. 8.
“The final rule provides crucial overtime pay protections to millions of workers who were treated as exempt under the outdated regulations that the final rule amended,” Justice officials said. “Our opening brief will show that the preliminary injunction rests on an error of law and should be reversed.”