Another Obama Administration Executive Action Blocked

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[11/23/16]  “The decision brings us a step closer to curbing regulations that have resulted in $80 billion in compliance costs and more than 25 million hours of paperwork. The fights are not yet over — and our work is just beginning,” said Linda Kelly, senior vice president of the National Association of Manufacturers.

Kelly was responding to the injunction issued by a federal judge in Texas against an effort by President Barack Obama and his Department of Labor to circumvent the legislative power of Congress, this time in a rule relating to overtime pay. The Labor Department rule would have increased the number of employees eligible for “time-and-a-half” overtime pay. Under “time-and-a-half,” an employee is paid 50 percent more, per hour, for each hour worked in excess of their normal number of hours worked. (Of course, this also increases the amount of tax revenue that can be collected by the Internal Revenue Service.)

Judge Amos L. Mazzant III of the Eastern Federal District Court in Texas ruled that Obama and his Labor Department had gone beyond its authority under the law when it proposed to raise overtime salary limits so significantly (from $26,660 to $47,476). The suit was brought by the U.S. Chamber of Commerce and other business groups. Mazzant was appointed to the bench by Obama.

The injunction is, of course, only a temporary action that suspends the regulation until Judge Mazzant can issue a more complete ruling on the merits of the case itself. But it appears that the judge is inclined to permanently block the actions of the Labor Department.

Marc Freedman, executive director of labor law policy with the U.S. Chamber of Commerce, certainly thinks so. “We are assuming that this preliminary injunction holds and there isn’t an appeal or some other thing that disrupts it.”

Twenty-one states had joined together in challenging the rule promulgated by the Labor Department. They argued that the Obama administration had exceeded its statutory authority in raising the overtime salary limit so significantly. The states were joined by several business groups in a consolidated lawsuit.

Significantly, Judge Mazzant even questioned whether the executive branch had the authority to establish a salary limit at all, despite this being done several times by the Labor Department in the years since Congress passed the Fair Labor Standards Act in 1938. The administration argument was that they were merely making a rule to keep up “with our modern economy,” an argument the judge rejected. He responded that the increase to the 40th percentile of all weekly earnings in the country essentially eliminated the exception in the law for “bona fide executive, administrative or professional” employees. Mazzant said that by raising the cap so high, “The Department exceeds its authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test.” He insisted in his ruling that the Labor Department must examine the duties of employees to determine who fits the exception.

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