Court blocks expansion of overtime pay rule after states sue

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LAS VEGAS (AP) (Business Wire) A federal court is blocking implementation of a regulation that would make an estimated 4 million more higher-earning workers eligible for overtime pay.

The U.S. District Court in the Eastern District of Texas granted a nationwide preliminary injunction Tuesday that prevents the Department of Labor from implementing the changes until the rule's legality can be further examined. The order comes after 21 states sued to block the rule before it took effect on Dec. 1.

The states included in the lawsuit are Ohio, Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, New Mexico, Oklahoma, South Carolina, Texas, Utah, and Wisconsin.

The lead plaintiff was Nevada Attorney General Adam Laxalt, who's a frequent critic of what he calls Obama Administration overreach.

The regulation would shrink the so-called "white collar exemption" and more than double the salary threshold under which employers must pay overtime to their workers.

Laxalt said the rule would burden private and public sectors.

Business Wire reports the National Retail Federation welcomed the judge’s ruling that will prevent the Labor Department’s changes to federal overtime rules from taking effect as scheduled on December 1.

“The Labor Department’s overtime changes are a reckless and aggressive overreach of executive power, and retailers are pleased with the judge’s decision,” NRF Senior Vice President for Government Relations David French said. “The rules are just plain bad public policy, and we are pleased that the judge is allowing time for the case to go forward before they can go into effect. We hope the judge ultimately finds in our favor, and in the meantime this timeout gives Congress a chance to take another look at the impact of these rules.”

Business Wire reports the nonpartisan Congressional Budget Office recently found that canceling the overtime changes would benefit consumers by avoiding price increases that would come if companies had to pay their workers more.

Real family income would be $2.1 billion higher without the changes in 2017 alone, and even families that would have had an increase in overtime earnings would have a net gain.

While CBO estimated that the new rules would extend overtime eligibility to an additional 3.9 million workers, it found that only about 900,000 of those employees currently work enough hours to actually receive overtime pay, or 0.6 percent of the U.S. workforce.

And those workers would make only an extra $650 a year, the CBO found.

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