Court ruling good news for businesses, workers
December 1, 2016
There’s good news for local businesses, business throughout Colorado and businesses nationwide: a district judge in Texas recently granted a preliminary injunction blocking the U.S. Department of Labor’s new overtime regulations.
The overtime rule was scheduled to take effect Dec. 1 and would have raised the salary threshold from $23,660 to $47,476. The rule also provided for three-year adjustments based on the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census region.
Vail Valley Partnership was one of several large groups of business interests in the state of Colorado, collectively representing the vast majority of Colorado employers of all sizes, to work with our congressional delegation to oppose the Wage and Hour Division regulations raising the salary thresholds for white collar workers.
Of interest to local businesses looking for clarity on “what’s next?” and what this means, “a preliminary injunction preserves the status quo while the court determines the department’s authority to make the final rule as well as the final rule’s validity,” said Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas in a Nov. 22 ruling.
Vail Valley Partnership opposed the Department of Labor regulations as we foresaw the new rules’ negative impacts on business and saw the new rules for what they were: a burden on small businesses and a driver of increased litigation.
U.S. Chamber of Commerce Senior Vice President of Labor, Immigration, and Employee Benefits Randy Johnson issued the following statement regarding the decision:
“We are very pleased that the court agreed with our arguments that the Obama administration’s new overtime rule was unlawful and stopped rule from taking effect on Dec. 1. If the overtime rule had taken effect, it would have resulted in significant new costs — more than $1 billion according to the Congressional Budget Office — and it would have caused many disruptions in how work gets done. Furthermore, the rule would have reduced workplace flexibility, remote electronic access to work, and opportunities for career advancement. This is a great result.”
To be clear, the proposed rule had nothing to do with overtime for non-exempt (hourly) employees — anyone who is paid on an hourly basis will continue (and would have continued, under the rule) to get overtime. It was exempt, salaried employees for whom the salary level test was doubling in order to continue being treated as exempt. Many of these salaried employees were as unhappy with the new rule as their employers because they felt effectively demoted, needing to keep track of their time (become hourly) when they had been salaried (and treated with more flexibility and more professionally) previously.
Again, the injunction doesn’t effectively kill the rule changes. It simply halts them from becoming effective on Dec. 1 (the original compliance deadline). Whether or not the rule changes take effect (and when) will be determined at a later date in court. The injunction sets the stage for additional court battles in the future, at which point the judge will rule on the merits of the states’ and business groups’ lawsuit against the Department of Labor.
The Society of Human Resource Management effectively answers the most relevant questions for businesses looking for guidance on the injunction by letting employers know that the short answer is nothing needs to change. For now, the overtime rule will not take effect as planned, so employers may continue to follow the existing overtime regulations.
Businesses in our community need someone to help speak collectively for them and the business community as a whole, and Vail Valley Partnership is here to play that role. We work with our members to create a voice for businesses in our region. As one of the largest chambers of commerce in Colorado, and in the mountain region, we are uniquely able to advocate effectively on behalf of Eagle County business few other organizations or associations can.
We are proud to have been a part of the coalition of Colorado business organizations opposing the labor department regulations and are pleased that the injunction has been put into effect as the proposed regulations were not business friendly and were a burden to small businesses and nonprofits in our community.
Chris Romer is president and CEO of Vail Valley Partnership, recently named Chamber of the Year by the Association of Chamber of Commerce Executives. Learn more at VailValleyPartnership.com.