A decision from a federal judge in Texas late Tuesday provides small business owners with a reprieve just a week before they were set to comply with sweeping changes to overtime pay laws.
The judge granted a nationwide preliminary injunction halting the implementation of a new Department of Labor rule extending overtime pay to an additional 4 million-plus Americans. The rule, finalized in May, essentially doubled the salary threshold for eligibility from just over $23,000 a year to more than $47,000 a year.
The regulation was introduced by the Obama administration as part of a push for better worker protections in the face of a stagnant federal minimum wage, which has not been raised from $7.25 an hour since 2009.
Two separate suits challenging the law were brought by 21 states and business groups including the National Retail Federation and the National Federation of Independent Business.
In a statement Tuesday, the Department of Labor said, "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 rule-making process, and we remain confident in the legality of all aspects of the rule."
The DOL said it is currently considering all of its legal options.
The timing is interesting for Main Street, with many business-owners wondering how worker protections will fare under President-elect Donald Trump. In a video Monday evening, Trump laid out his plans for his first 100 days, declaring "that for every one new regulation, two old regulations must be eliminated." While campaigning, Trump indicated that the DOL overtime rule would be a target early on.
Advocates for better worker protections are slamming the ruling. They maintain that the fight for better pay and benefits for American workers isn't over yet.
"The business trade associations and Republican-led states that filed the litigation in Texas opposing the rules have won today, but will not ultimately prevail in their attempt to take away a long-overdue pay raise for America's workers," said Christine Owens, executive director of the National Employment Law Project, in a release. "Unfortunately, for the time being, workers will continue to work longer hours for less pay thanks to this obstructionist litigation."
But business groups, including the NFIB, are calling the ruling a win for small businesses in particular. The conservative lobbying group said its own research found that 44 percent of small businesses employ at least one person that would be eligible under the rule.
"This is a victory for small business owners and should give them some breathing room until the case can be properly adjudicated," said NFIB president and CEO Juanita Duggan in a statement. "Small business owners remain opposed to the overtime rule and we are going to keep fighting. In the meantime, the court's decision today is very good news for small business owners who were under heavy pressure to meet an unrealistic deadline."
The National Retail Federation, also a plaintiff in the business suit challenging the law, echoed that sentiment in a prepared statement of its own.
"The Labor Department's overtime changes are a reckless and aggressive overreach of executive power, and retailers are pleased with the judge's decision," said NRF Senior Vice President for Government Relations David French. "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."