Overtime Rule Defeat Is a Big Win for Small Business

Date: September 07, 2017

A federal judge in Texas recently overturned the Labor Department’s burdensome overtime mandate, marking a victory for small business owners.

Last week, a federal judge in Texas struck down the Department of Labor’s overtime rule, which would have overburdened small businesses with heightened labor expenses by making millions of workers qualify for overtime pay, according to USA Today. Originally scheduled to take effect last December, the Obama-era overtime rule would have enabled 4.2 million employees to be eligible for time-and-a-half wages for every hour worked over the standard 40 hours per week.

U.S. District Judge Amos Mazzant ruled that the salary threshold that establishes which employees are either eligible or exempt from overtime was unreasonably high. The threshold would have been raised from $23,660 to $47,476 for executive, administrative and professional employees. NFIB and 55 other business organizations worked tirelessly to bring the case to the U.S. District Court for the Eastern District of Texas and to win a victory for small business.

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Last September, NFIB and other business groups filed a lawsuit challenging the rule in court, and 21 state attorneys general worked together to file a separate action. The U.S. District Court for the Eastern District of Texas combined both cases. Mazzant issued a preliminary injunction in November that blocked the overtime rule from being imposed on employers on December 1, 2016. In his ruling Thursday, Mazzant formally overturned the Labor Department overtime regulation.

“We’re pleased the court made permanent the temporary injunction it imposed against the rule in November,” said Karen Harned, executive director of the NFIB Small Business Legal Center. “If the overtime rule had been allowed to stand, it would have driven up the cost of doing business for employers across the country.”

The government could appeal Judge Mazzant’s decision.

The Department of Labor has issued a Request for Information asking stakeholders for input on the salary threshold and duties test used to exempt employees from overtime pay.

NFIB research found that 44 percent of small businesses have at least one employee who would have been eligible for overtime pay under the rule. 


Learn More About NFIB’s Extensive Work on the Overtime Rule


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