A federal judge in Texas could strike down another of the Obama administration's most controversial labor rules.
Judge Amos L. Mazzant from the Eastern District of Texas will rule Tuesday on the Department of Labor's new overtime regulations. Those regulations would force employers to pay overtime to any white collar worker making less than $913 per week–about $47,000 per year—double the previous threshold of $455. The rule also includes an escalator provision that automatically raises the threshold every three years, similar to how some minimum wage provisions are designed to adjust for inflation.
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More than 20 states and dozens of companies and industry trade groups have filed suit to block the regulations from taking effect. State and local governments have argued that the regulation constitutes executive overreach and potentially violates the 10th Amendment, while private sector entities have argued that the department did not follow administrative procedures when devising the new rule, which Obama first called for in 2014.
Labor watchdogs and attorneys say the injunction will have an immediate impact on the legal scene that President-elect Donald Trump inherits from the Obama administration. Trey Kovacs, a labor policy expert at the Competitive Enterprise Institute, said the chances of winning a permanent injunction "are unlikely," but a narrow exemption is within the realm of possibility.
"There are aspects of the rule that could get thrown out," he told the Washington Free Beacon. "Nothing in the Fair Labor Standards Act gives DOL the authority to automatically adjust. That's plainly not in the statute."
The decision will come just six days after another Texas federal judge blocked the department's Persuader Rule from taking effect. Senior U.S. District Court Judge Samuel Cummings granted a permanent injunction against the regulations, which would have forced companies to disclose all legal consultations they had during union elections, regardless of whether the consultants involved interacted with workers. Judge Cummings called those regulations "unlawful" in his order. The rule is now seen as all but dead, since the Trump administration can rescind the appeal once he is sworn in.
The overtime provision will be tougher to untangle if a permanent injunction is granted, according to Steve Bernstein, a labor and employment attorney at Fisher & Phillips LLP. In order to reverse the rule, the department would have to offer another lengthy comment period giving employers, unions, and other interest groups time to weigh in, which could take up to a year. The Trump administration could issue a non-enforcement directive to the department in the interim, which would protect employers from government sanctions stemming from the Obama-era rule.
"The administration will have tools to undo this over time. But that can't happen overnight. You need to go through the same process," Bernstein said. "Even with a non-enforcement directive, the Fair Labor Standards Act allows for the private right of action. A worker can still hire a lawyer off the street and sue."
Bernstein added that the administration could rely on Congress to pressure the agency through its power of the purse. Kovacs said such a strategy would be possible if it denied the agency funds to implement or enforce the provision, but said there were other avenues to resolve the issue. For example, the lame duck Congress could issue a resolution overruling the regulation using its authority in the Congressional Review Act.
President Obama announced the rule in a joint signing ceremony with Labor Secretary Tom Perez in May. If the injunction is not granted, the rule will take effect Dec. 1.