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Trump Labor Dept wants pay to decide overtime, but not at Obama level

June 30 (Reuters) - The U.S. Labor Department on Friday defended its authority to use salary levels to decide who was eligible for overtime pay but distanced itself from an Obama administration rule that greatly expanded the number of qualifying workers.

Under U.S. President Donald Trump, the Labor Department has continued to support an Obama administration-era rule to raise the pay threshold for overtime eligibility. But it has not endorsed the former administration's move to nearly double that threshold, an increase strongly opposed by business groups.

The Labor Department told a federal appeals court on Friday it had the power to use salaries to set thresholds for mandatory overtime pay, without advocating for the $47,500 maximum salary level set by the department under Obama.

The Labor Department is challenging a November decision from a federal judge in Texas that blocked the Obama rule, a decision that the department said could prevent it from setting a new threshold below that set by the Obama administration.

The Obama rule was expected to extend overtime pay eligibility to more than 4 million salaried workers. Nevada and 20 other states sued last year to block the rule. Trump's Labor Secretary R. Alexander Acosta said during his confirmation hearing in March that the correct threshold might be around $33,000. The Labor Department took initial steps earlier this week to begin developing a new threshold.

In its Friday brief to the New Orleans-based 5th U.S Circuit Court of Appeals, the Labor Department made it clear it did not support the salary threshold developed under Obama.

But the department told the court it was reluctant to move forward with the rulemaking necessary to set a new threshold as long as its authority was in question.

Nevada and the other states have said that the use of a salary threshold to determine overtime eligibility has been controversial for decades, but appeals courts allowed it because it had been set low enough to exempt management workers.

But the Obama administration rule is far more drastic, the states said, expanding overtime pay to tens of thousands of state employees.

Nevada Attorney Generals Office spokeswoman Monica Moazez said the office is reviewing the Labor Departments brief. (Reporting by Robert Iafolla; Editing by Alexia Garamfalvi and Andrew Hay)