by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Bill McMorris of the Washington Free Beacon reports that a federal court order blocking the Obama administration’s new overtime rules will not stop some companies from moving forward with compliance plans.
Large companies may move forward with new compensation policies aligned with the Obama administration’s overtime rules, despite a federal court’s injunction against those regulations, according to labor attorneys.
Texas federal judge Amos L. Mazzant, an Obama appointee, granted a preliminary injunction against Department of Labor regulations on Nov. 22 that would have raised the threshold at which companies must start paying overtime to white collar workers. The rules would have forced companies to pay overtime to anyone earning less than $913 a week—about $47,000 a year—more than double the existing threshold of $455 a week. Judge Mazzant said that regulators departed from the language of the Fair Labor Standards Act.
“Congress intended the EAP [executive, administrative, or professional] exemption to depend on an employee’s duties rather than an employee’s salary,” Mazzant said in the ruling. “Nothing in the EAP exemption indicates that Congress intended the Department to define and delimit with respect to a minimum salary level.”
Despite the ruling several management-side labor attorneys expect many employers to move forward as if the rules were in effect. Many have already promised raises to employees who are being paid around the $913 mark, in order to ensure compliance when the rule was set to take effect on Dec. 1.
Gerald Hathaway, an attorney with Drinker, Biddle, & Reath LLP, said that companies, especially larger corporations, prefer having a clear threshold with which to weigh their workforce. The injunction would not cause employers to revoke promised raises and reorganization for their workforces, he predicted.
“Most large employers have teed up to put the policy into place. The consequence being that many large employers are going to stick with what they were going to implement anyway,” Hathaway said. “Small companies can hit the brakes and do so with comfort.”