Last week, a federal judge in Texas struck down the overtime rule initiated under the Obama administration. The rule would have changed the way restaurants around the country conduct business.
The rule would have made any salaried employee making less than $47,476 eligible for overtime. In the restaurant and retail sectors, the rule’s effect would have been great since so many employees make less than that. With such thin margins, few local businesses can afford to pay out a lot in overtime.
A Homebase customer analysis report predicted that the rule change would impact roughly 85 percent of managers at local businesses.
U.S. District Judge Amos Mazzant invalidated the rule on the basis that the U.S. Department of Labor improperly used a salary-level test to determine which workers are exempt from overtime compensation. The judge last year had issued an injunction to prevent the rules from going forward.
Even though the block came from Texas, the judgment applies to all states.
“The department has exceeded its authority and gone too far with the final rule,” Judge Mazzant said. “The department creates a final rule that makes overtime status depend predominantly on a minimum salary level, thereby supplanting an analysis of an employee’s job duties. Because the final rule would exclude so many employees who perform exempt duties, the department fails to carry out Congress’s unambiguous intent.”
The Restaurant Law Center approved of the decision. Angelo Amador, its executive director, said, “[The] decision to invalidate the rule demonstrates the negative impacts these regulations would have had on businesses and their workers. We will continue to work with DOL on behalf of the restaurant industry to ensure workable changes to the overtime rule are enacted.”