A federal judge in Texas issued a nationwide injunction on Tuesday against an Obama administration regulation expanding by millions the number of workers who would be eligible for time-and-a-half overtime pay.
The proposed regulation sought to shrink the “white-collar exemption” that allows employers to skip overtime pay for salaried administrative or professional workers who make more than about $23,660 per year. Critics say it’s wrong that some retail and restaurant chains pay low-level managers as little as $25,000 a year, and with the current regulation no overtime pay, even if they work 60 hours a week.
Under the new rule, those workers would have been eligible for overtime pay as long as they made less than about $47,500 a year. The cap would be automatically adjusted for inflation going forward.
The threshold was established with the Fair Labor Standards Act (FLSA) of 1938. It has been adjusted seven times since then, but only once since 1975 (in 2004). The cap does not keep pace with inflation, and must be adjusted periodically. In 1975, overtime protections applied to 62% of U.S. full-time salaried workers, but today just 7% are protected.
The fate of the regulation had already been thrown into question by the election of Donald Trump as president two weeks ago. Mr. Trump has promised to reverse many regulations approved during the Obama administration, and the Republican Congress has generally criticized the scope of the expansion of overtime eligibility.
The irony here is that many working class people voted for Trump expecting their interests would be safeguarded by a Republican administration.