A federal judge in Texas halted a Labor Department rule change that would have made 70,000 salaried S.C. workers eligible for overtime on Dec. 1.
In May, the Labor Department, at the direction of President Barack Obama, doubled the threshold at which salaried workers are entitled to overtime pay, increasing the previous threshold of $23,660, set in 2004, to $47,476.
Since the Labor Department issued the change in May, companies have been scrambling to determine how to handle employees who are above the previous salary threshold.
“Small businesses in general have a difficult time meeting payrolls, especially in the South, where the lowest salaries are,” said Alice Paylor, a shareholder and attorney at Rosen Hagood in Charleston.
U.S. District Judge Amos L. Mazzant III granted a nationwide emergency injunction Tuesday (.pdf) in response to a lawsuit filed by 21 states and more than 50 business organizations. Mazzant said the rule could harm employees and employers if it is implemented and later overturned.
The states made several unsuccessful arguments, but the judge focused his ruling for a temporary injunction on how labor law defines executive, administrative and professional workers.
The Labor Department asserts those workers should be defined by their job role and salary level. The states assert that those workers should be defined by job role only and not subject to overtime rules.
“Congress intended the EAP exemption to depend on an employee’s duties rather than an employee’s salary,” Mazzant said in the ruling.
Subsequent rulings, appeals or other efforts to overturn the injunction are possible, depending on the Labor Department and Obama’s response.
“We strongly disagree with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hard-working Americans,” the Labor Department said in a statement. “The department’s overtime rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options.”
S.C. Attorney General Alan Wilson said when he joined the multistate lawsuit in September that the rule change was bad for businesses in South Carolina.
“This administration is once again allowing unelected bureaucrats to circumvent Congress and make up the rules as they go,” Wilson said earlier this year.
Staff writer Liz Segrist contributed to this report. Read more about this topic in the Nov. 28 print edition of the Charleston Regional Business Journal.