Editorial: Overtime pay rule should go

The Detroit News

A federal judge last week blocked President Barack Obama’s regulatory attempt to extend mandatory overtime pay to salaried workers based solely on the amount of their salary. This matter should now be left to the new administration.

The ruling is a win for the business community, and provides some relief for employers who were scrambling to meet the Dec. 1 effective date for the rule.

President-elect Donald Trump has said rolling back regulations such as the overtime rule will be a priority as he attempts to stimulate business growth and encourage companies, particularly small and mid-sized businesses, to hire more workers. That’s a good to-do list.

Trump has specifically cited the overtime rule as an example of how regulatory agencies, in this case the Department of Labor, overburden employers.

He also mentioned in his recent YouTube video that cutting back regulations was a primary goal of his first 100 days in office and that for every one regulation imposed under his administration, two would be cut back.

The overtime rule, if allowed to take effect, would require employers to pay overtime to all employees, including managers, who earn less than $47,500 per year. That’s an increase from the previous threshold of $23,660, which was set in 2004.

But a rule with such wide impact on the economy should have gone through Congress, which is what the business community and 21 states are arguing in the lawsuit.

The federal judge who issued the ruling, an Obama appointee, said the Fair Labor Standards Act exempts employees from overtime if they’re performing executive, administrative or professional duties. The new rule substantively changed the act to base access to overtime pay solely on salary.

The Labor Department can appeal the judge’s ruling to the federal circuit court serving Louisiana, but that particular court hasn’t been friendly to Obama regulations in the past. Additionally, with Trump soon taking over, an appeal seems pointless.

There is room for adjusting the overtime pay threshold. Certainly the economy has changed greatly since 2004. But if the act itself is to be rewritten, that should be done by Congress.

Streamlining business regulations is a top goal of Trump as well as House Speaker Paul Ryan. It seems likely the two will agree on measures to give businesses more discretion over wages.

Many businesses have already made personnel or salary changes to comply with the new rule.

For those employers who spent time and money planning for and adjusting to the rule change, the court ruling is of little help. But they along with everyone else will benefit if lifting the overall regulatory burden spurs an economic surge.