Analysis

Obama's thwarted overtime expansion

A federal judge in Texas ruled the Labor Department had overstepped its authority in setting new overtime rules

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Business owners around the country are cheering this week, said Michelle Rindels at the Associated Press. New overtime rules were set to go into effect on Dec. 1 that would have made more than 4 million workers "newly eligible for time-and-a-half pay" when they worked more than 40 hours a week. Employers would have been required to pay overtime to salaried workers making less than $47,500 a year, "a dramatic jump from the old threshold" of less than $23,660. But those changes are now on hold after a federal judge in Texas ruled the Labor Department had overstepped its authority by raising the salary limit so significantly. Employers are off the hook for the extra pay for now, but they have a fresh dilemma on their hands, said Katie Johnston at The Boston Globe. Many businesses have spent the past few months preparing for the new rules — some by bumping workers' pay up to the new threshold to avoid paying them overtime or by converting salaried employees to hourly wages. Should they "roll back changes that have already been put in place?"

Save your concern for the workers who were expecting a raise this week, said Chris Tomlinson at the Houston Chronicle. It doesn't seem right that low-level retail and restaurant managers who make $25,000 a year but work 60 hours a week can't log overtime pay. When the overtime rules were last revised, in the 1970s, "65 percent of salaried workers were entitled to overtime. Now, only 11 percent are." Politicians find it "very easy to demonize U.S. companies that open foreign factories and pay low wages overseas." But when it comes to making sure that U.S. jobs pay a living wage? "Not so much."

Not all workers will be sorry to see the new rules go, said Virginia Postrel at Bloomberg. The Obama administration thought it could give workers "more money or shorter hours by decree," but the reality is that there's no one-size-fits-all job arrangement. Some workers, like those at nonprofits, put in long hours for relatively small salaries because they believe in their work or because they get flexibility. "Putting such employees on a time clock is not just a burden. It can seem like an insult." The overtime rules also assume "that employers have a big pot of money somewhere that they're keeping for themselves instead of paying their hardworking staffs." For businesses in competitive industries, like retailers and restaurants, that's just not true.

Another casualty: President Obama's effort to build a legacy through executive power, said Michael Memoli at the Los Angeles Times. When the overtime rules were finalized in May, they were hailed "as the most consequential action the Obama administration could take for middle-class workers without congressional involvement." But Obama gambled that his successor would preserve his executive actions, only to see Donald Trump elected. Even if the Labor Department successfully appeals, Obama's overtime rule, as well as his executive actions on climate, immigration, and foreign policy, looks more or less doomed.

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