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Texas judge issues injunction, blocking overtime pay law

November 27, 2016 at 4:12 PM EST
A federal judge in Texas has issued a preliminary injunction on a new nationwide rule that would nearly double the salary cap for workers eligible to receive overtime pay to $47,476 a year. The rule was supposed to take effect on Dec. 1. Yuki Noguchi, business desk reporter for NPR, joins Alison Stewart.
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ALISON STEWART, PBS NEWSHOUR WEEKEND ANCHOR: This week, a new nationwide rule on overtime pay was supposed to take effect. But last week, in response to a legal challenge, a federal judge in Texas issued a preliminary injunction blocking the change. The Obama administration sought to raise the salary cap for workers eligible for overtime pay to $47,500 a year; about double the current cap. The rule would affect 4 million workers, requiring employers to pay them time-and-a-half for every hour exceeding 40 hours in a given week. And company payroll departments are already prepared for the change.

Joining me now to discuss the ramifications of the rule and its status is NPR business correspondent Yuki Noguchi.

Yuki, a little background. Why did the Labor Department issue this rule and why that number?

YUKI NOGUCHI, NPR BUSINESS CORRESPONDENT: Their argument was that they were trying to modernize the rules and increase the salary to a level that would be relevant, that is what most people might consider white collar jobs.

STEWART: How does this move or the attempt for this move play into the overall discussion about living wage and raising the federal minimum wage, which has also not been changed in many years?

NOGUCHI: Well, I think the argument the Obama administration again was trying to make was to try to address this issue of, you know, forcing employers to either pay overtime or to raise the salaries of workers who are making, you know, just over $23,000 a year to a much higher level in order to exempt them from the overtime rules.

So, this would affect retail workers store managers, you know, restaurant managers and a lot of nonprofits too, where salary levels might be lower, but they might be required to work, you know, odd hours or extra hours.

STEWART: So, this judge in Texas, I believe his name is Amos Mazant III, he is the person who put the injunction, a block on this. Now, Nevada’s attorney general, was one of the attorney generals, one of the states suing to stop this, said he sent it to Texas because they had a fast docket.

Why was time important here?

NOGUCHI: The argument was that there was going to be irreparable harm. The rules would take effect December 1 and, you know, then reversing that would be difficult.

The fact is, Alison, that a lot of businesses were already preparing for this rule to take place. December 1 happens to fall mid-week and most payroll systems as you know close at the end of the week. So, as a practical matter, there are probably many, many employers that have already instituted changes, that they will either have to choose to unwind or just keep in place.

STEWART: There were two headlines that really spoke to how people are receiving this information. One was from an Idaho paper that said you’re not going to get that pay raise you expected and one of the business news — cable news websites that said, “Small businesses receive a reprieve.” Are both true?

NOGUCHI: I think yes. I mean, I think it’s both true. I mean, I think it might be disappointing news for workers.

I don’t think it’s — I don’t think it’s true that all employers will choose to unwind any changes that they may have made because we are in a relatively low unemployment situation. We’re talking about employers having increasing problems attracting and retaining talents. You know, it sends a very potentially negative signal to workers who might have benefited from these changes.

But there are also workers who might have been bumped down from salaried to hourly, and perhaps, if the employer decides that for the morale of the company, it would be better to unwind the rule. It does give them the flexibility to do that.

STEWART:
Yuki, tell us a little bit more about how this one instance is — shows — has broader implications.

NOGUCHI: Well, I think that the injunction, the matter of the injunction obviously affects the workers and the employers that are affected by the rule change itself. But it’s also indicative — I think it’s a microcosm for the regulatory limbo that we are in. There are open questions about any number of regulations that might affect not just workers and employers, but, you know, anyone and anything that’s regulated.

So, you have aspects of the Affordable Care Act for example that President-elect Donald Trump has pledged to repeal. You have aspects of the Dodd-Trump Financial Reform Act that have yet to take effect.

And so, whether you look at those regulations or this injunction of the overtime rule, you know, it sort of raises this issue of what kinds of regulations that have passed in recent years are either going to be enforced or challenged or repealed. And I think is sort of — this issue of the injunction is actually indicative of some of that uncertainty.

STEWART: Yuki Noguchi from NPR — thanks for sharing your reporting.

NOGUCHI: Thank you.

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