There’s a new nominee for the Grinch who stole Christmas—Judge Amos Mazzant of the U.S. District Court, Eastern District of Texas. In a shocking action, he took away pay protections for millions of U.S. workers by imposing an injunction on new overtime standards that had been set to take effect next Thursday, just in time for the holiday season.
December 1 was set up as an historic day for working Americans, as new overtime rules—the crown jewel of President Obama’s labor agenda—were set to go into effect.
- 4.2 million Americans were set to gain the right to time-and-a-half pay for work beyond 40 hours per week;
- 8.9 million Americans whose overtime was questionable under the old law would have their rights solidified; and
- employers were expected to react by giving a $1.2 billion pay raise to workers across the country.
What happened? Today’s generation of overworked Americans wouldn’t know it, but time-and-a-half pay for overtime hours is in fact the law of the land. Only certain executive, administrative, and professional workers who control their hours are exempted from protection.
In general, most of the tests for these exemptions are complicated, but one is simple. If workers are paid a salary so low they are not really the kind of bona fide managers targeted by the law’s original exemption, they are to be paid extra for overtime work.
The Department of Labor had completed a painstaking process to increase that threshold from the extremely low $455 per week to $921 per week. The new level was conservatively set so that the bottom 40 percent of workers in the poorest part of the nation would be guaranteed overtime pay, and this low level would be the floor for the nation.
The court ruled that plaintiffs satisfied the standard for a preliminary injunction, suggesting that the Department of Labor had exceeded its authority to apply the salary test as a way of determining who was a bona fide executive, administrative, or professional worker. That was despite the fact that the department has adjusted the salary test seven times since 1938 before, with no court ruling it was against the law’s intent. The Bush Administration defended a proportionally larger increase in the salary test from $155 to week to $455 in 2004. State governments had brought one of the suits consolidated into the case decided yesterday. The court gave weight to the strain on public coffers of increasing the pay of its workers, without even mentioning the benefit of increased tax receipts and welfare of citizens in these states.
The main intended beneficiaries of the rule were lower-middle-class workers earning between the old and new thresholds. In one of the signature moves of the pre implementation period, Walmart raised the wages of its managers above the new threshold. This group of workers includes a diverse set of working class workers, including a big slice of the white working class workers without a college degree who voted for Donald Trump in record numbers. Workers with only a high school degree make up 25 percent of the potential salaried beneficiaries of the new rules, but only 15 percent of the total workforce. The new overtime rules was one of the most reliable levers available to policy makers who want to take action on the stagnant wages of those earning above the minimum wage.
For his part, Donald Trump has said that the overtime hurts small business who should be exempted. Congressional leaders may have been set to target the rule in January through a Congressional Review Act challenge as part of their deregulation agenda. For its part, the Department of Labor says it “is considering its legal options to defend the rule.” It will likely lay squarely at the feet of Donald Trump and his administration to determine whether to continue to pursue the implementation.
In the end, this is a gut check for Donald Trump. Is he simply filled with rhetoric, or does he actually have good intentions for working people? As president, he will have the ability to defend the regulation or reissue it in a way that will stand a court challenge if necessary, and with the control of both houses, he also has the ability to advocate for legislation that protects workers’ overtime pay. His administration will now have to decide whether the working class voters who supported his election deserve this long overdue raise or not.