Industry News | September 5, 2017 | By Danny Klein | QSR Exclusive Brief

Justice Department Won't Save Obama-Era Overtime Rule

President Donald Trump’s administration, with Labor Secretary Alexander Acosta, is already reconsidering the overtime rule. flickr: Tom Blackwell
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Five days after a Texas federal judge struck down the Obama-era overtime rule, the Justice Department announced Tuesday it will drop its appeal, essentially showing support for the court’s determination that the U.S. Department of Labor improperly used a salary-level test to determine which workers are exempt from overtime compensation, according to Bloomberg BNA.

The contentious overtime rule, which would have made about 4 million new workers eligible for time-and-a-half pay, called for salary thresholds to double and for any salaried employee making less than $47,476 to be eligible for overtime. That salary cutoff is currently $23,660.

U.S. District Judge Amos Mazzant invalidated the rule on August 31, saying “The department has exceeded its authority and gone too far with the final rule. The department creates a final rule that makes overtime status depend predominately on a minimum salary level, thereby supplanting an analysis of an employee’s job duties. Because the final rule would exclude so many employees who perform exempt duties, the department fails to carry out Congress’ unambiguous intent.”

The Restaurant Law Center released a statement Tuesday supporting the DOJ’s decision to ask for a dismissal of the overtime rule appeal. The DOJ initially asked the U.S. Court of Appeals for the Fifth Circuit to affirm its authority in the overtime matter.

“The Obama administration’s drastic changes to the federal overtime rule would have hurt small businesses and their employees. We applaud DOJ’s decision to ask for a dismissal of the appeal. This will allow the U.S. Department of Labor time to consider input from the business community to enact workable changes to these regulations,” says Angelo Amador, executive director, Restaurant Law Center, in a statement.

President Donald Trump’s administration, with Labor Secretary Alexander Acosta, is already reconsidering the rule, according to Bloomberg BNA reporter Chris Opfer. The DOL could now issue a new rule with a more moderate salary threshold bump.

In November, Judge Mazzant blocked the overtime regulation. The preliminary injunction, issued in a 20-page order, halted the overtime rule from taking effect December 1.

Mazzant, who was nominated to the court by President Barack Obama, said the delay was needed so the rule could be challenged in court.

“We strongly disagree with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans,” the Department of Labor said at the time. “The department’s overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule.”