WASHINGTON—A federal judge in Texas has issued a nationwide injunction blocking the Department of Labor’s rule requiring overtime pay for more than four million new workers.
In a 20-page decision, U.S. District Judge Amos L. Mazzant ruled that 21 states and more than 50 business groups that sued to block the rule stood a significant chance of success and would suffer serious financial harm if the rule was put into effect as scheduled on Dec. 1, reported Forbes.
The judge wrote that the Obama administration overstepped its authority by raising the salary cap below which all workers must receive overtime pay from $455 a week to $921 a week or $47,892 a year, Forbes reported.
“This is a welcome delay for many small businesses, especially credit unions, that would not have been able to integrate this immense increase without impacting the services they provide,” said Executive Vice President of Government Affairs and General Counsel Carrie Hunt. “NAFCU and our members believe that this rule would have created major unintended consequences and obstructed growth opportunities for many white collar workers. Ultimately, in its current form, this rule could hurt the people it was trying to help.”
In response to the ruling, CUNA said it welcomed the decision, noting it has been pushing for a delay and warning that the threshold change will magnify the regulatory burdens and constraints credit unions already face.
“That, in turn, has the potential to negatively impact credit union members, particularly if the credit unions are forced to limit services as a result of changed employment situations or the inability to hire full-time employees,” CUNA said. “There is also a concern that the unintended negative consequences of the rule could outweigh any potential benefit, even to those employees it aims to help.”
CUNA has been urging a delay in implementation so the agency has time to fully assess the severe impact the plan would have on credit unions, especially smaller ones and those in non-metropolitan areas, and also on their members.
“We welcome the decision. This is an issue on which the CUNA/League system has been engaged for some time,” commented CUNA Chief Advocacy Officer Ryan Donovan. "We’ve felt from the beginning that the Department of Labor’s proposal was overbroad and extreme and could have unintended consequences on credit unions and other small businesses. We expressed our concern to the Department of Labor in our comment letter in September 2015 and we’ve been encouraging Congress to address this rulemaking ever since. We are pleased that the court has made its decision.”