Politics

Why Millions of Salary Workers May Not Get a Raise After All

November 23rd 2016

By:
Danielle DeCourcey

The Obama administration's new overtime rules were set to give millions of Americans pay raises effective Dec. 1, but a federal judge blocked it this week. 

U.S. District Judge Amos Mazzant ruled on Tuesday that the new federal overtime rules were unlawful, and granted an injunction (meaning that the court stopped it's nationwide Dec. 1 implementation), according to Reuters

A group of businesses, 21 states and the U.S. Chamber of Commerce sued to block the rule in September, arguing that the proposed overtime rules would have caused a spike in government costs and significant lay offs, according to NPR

The revamped overtime rules from the Department of Labor, would've made salary employees who earned $47,476 or less a year eligible for overtime, which is a significant increase considering that the current overtime rule sits at $23,660

The changes would have affected more than 4 million workers, and forced employers to either divide salary employees into hourly wages, and pay them overtime accordingly or raise salary employees to at least $47,476. 

Political reaction to the decision on Twitter seemed to follow party lines:

Sen. Bernie Sanders (D-Vt.), who made wage and salary increases a prominent part of his campaign for the Democratic presidential nomination, tweeted that the court decision will "unfairly harm" workers. 

Other Democrats also tweeted their opposition to the court's decision:

However, Republicans celebrated the loss for the Obama administration:

Speaker Paul Ryan (R-Wis.), and other Republicans said that if the overtime rule would've changed then it may have hurt small businesses and forced employers to eliminate salary positions in order to be able to afford the pay increases. "It is a disaster that would hurt the very people it claims to help," Ryan tweeted Wednesday. 

"By mandating overtime pay at a much higher salary threshold, many small businesses and non-profits will simply be unable to afford skilled workers and be forced to eliminate salaried positions, complete with benefits, altogether," he wrote in a statement in May. "For the sake of his own political legacy, President Obama is rushing through regulations — like the overtime rule — that will cause people to lose their livelihoods."

But it's possible the overtime rule could have died during President-elect Trump's administration. 

The strong Republican opposition to the overtime rule means it could have been repealed or changed after Trump entered office in January. Republicans will control both the House and the Senate, and Trump promised to attack significant parts of President Barack Obama's legacy, including his executive orders, the Affordable Care Act and pollution regulations. 

After the preliminary injunction, the Department of Labor made the following statement to NPR

"We strongly disagree with the decision by the court, which has the effect of delaying a fair day's pay for a long day's work for millions of hardworking Americans. The department's overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options."

You can read the full court decision on NPR's document cloud

RELATED: Why Millions of Americans Are Getting a Raise Very Soon