Judge Blocks 12.5 Million Workers from Receiving Overtime Pay

By Yuqi Wang, Policy Analyst, Economic Policy Project, NCLR

On November 23, the U.S. District Court for the Eastern District of Texas blocked the Department of Labor’s (DOL) updated overtime eligibility rule from going into effect by suspending the rule’s December 1 enforcement date. The Department of Labor’s (DOL) updated overtime rule, finalized in May 2016, would have brought employers and workers into the 21st century by increasing the overtime salary threshold from $23,660 to $47,476. By siding with business interest groups, the Court’s decision is a blow to the 12.5 million workers who were counting on the updated overtime rule to provide them with the right to be compensated fairly for a hard day’s work. Workers in office and administrative positions, transportation and material moving professions, as well as construction occupations are just some of the people severely impacted by this decision.

It’s important to note that, contrary to the Court’s assertion that the DOL exceeded its authority, the agency has had the ability to change the minimum salary threshold for overtime for the past 78 years. In fact, the DOL has updated the salary threshold seven times since the Fair Labor Standards Act (FLSA) became law in 1938.

The most recent update was in 2004, but this merely adjusted the 1975 salary threshold for inflation. This means employers are still operating under overtime regulations from the 70s. As a result, salaried workers earning as little as $23,660 are unable to receive overtime. In 1975, more than 60 percent of salaried workers qualified for overtime, but in 2015, only 8 percent of workers qualified, since the overtime rule are not mandated to keep up with inflation. DOL’s updated overtime rule would have ensured 33 percent of the workforce qualified for overtime. Moreover, the updated rule would have been required to keep up with inflation, something that is not currently mandated.

Latino workers would benefit significantly from the updated overtime rule. Under the updated regulation, more than two million Latino workers, or 34 percent of all salaried Latinos, would be able to take home additional pay if they work more than forty hours a week. This, in turn, would mean improved economic security for Latinos and their families.

On December 1, the Justice Department, on behalf of the DOL, filed a notice to appeal the decision to the U.S. Circuit of Appeals for the Fifth Circuit. As millions of employers and workers anxiously await the court’s decision (most likely to be during the first quarter of 2017), companies like TJX and Walmart have decided to continue implementing the updated overtime rule. NCLR applauds such actions and urges more employers to follow suit. With stagnating wages, and no concrete plans to expand the Earned Income Tax Credit or increase the federal minimum wage on the horizon, the updated overtime rule is one of the best opportunities to ensure no worker puts in long hours for less pay.