A federal judge blocked the Obama administration's plan to make about 5 million additional American workers eligible for overtime pay Nov. 22.
The new rule, which was to take effect Dec. 1, would have doubled the maximum salary a worker can earn and still be eligible for mandatory overtime pay, Reuters reports.
Currently, overtime pay is mandatory for workers who make an annual salary of $23,660 or less. The new rule would have increased the maximum salary to $47,476, notes The New York Times.
However, U.S. District Judge Amos Mazzant agreed with 21 states and a coalition of business lobbyists that the rule is unlawful and granted their motion for a nationwide injunction, reports CNBC.
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Although the injunction is only a temporary measure that suspends the regulation until the judge can issue a ruling on the merits, he is expected to ultimately strike down the regulation.
Mazzant’s opinion stated that the Labor Department does not have the right to establish a salary limit, which it has been doing since 1938.
In a statement, the Labor Department said it “strongly disagreed” with the decision and was “considering all of our legal options.” It also defended its historical right to establish salary limits for overtime pay. “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,” the statement said.
Led by the U.S. Chamber of Commerce, the business groups who brought the case to court argued that increasing the threshold for overtime pay would kill jobs.
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Robert Reich, former Secretary of Labor, disagrees, contending that the new rule would actually increase jobs. “That’s because employers who don’t want to pay overtime have an obvious option: They can hire more workers and employ each of them for no more than 40 hours a week,” he says.
Reich also cited a Gallup poll indicating that half of full-time American employees now work more than 40 hours per week, while only 8 percent of salaried workers currently qualify for overtime pay.