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Nov. 25 — A court block against the Labor Department’s overtime rule is creating mixed emotions in the construction industry because of the uncertainty that clouds the rule’s fate, a contractor group’s spokesman told Bloomberg BNA.
Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas Nov. 22 granted 21 states’ motion for a preliminary injunction to block the rule, which was set to make some 4 million workers newly eligible for overtime pay when it took effect Dec. 1.
Many construction contractors already had taken steps to ensure they would have complied with the rule, such as by designating employees for pay raises or preparing to reduce their work hours, Jimmy Christianson, regulatory counsel for the Associated General Contractors of America, told Bloomberg BNA Nov. 23.
It’s unclear whether the Obama administration will appeal Mazzant’s injunction, Christianson said. Industry employers now must face the practical problem of having to choose whether to go through with or reverse these steps, he said. “Obviously, we say, ‘Proceed with caution.’”
The “best-case scenario” for employers now is for the Obama administration to forgo a challenge to the injunction and let the incoming Trump administration and Republican-controlled Congress decide what to do with the rule, Christianson said.
The overtime rule would have expanded overtime eligibility to those earning up to $47,476 per year, nearly double the current threshold. The measure also would have automatically adjusted the salary threshold for inflation every three years. Nearly 100,000 construction supervisors would have become eligible for overtime pay under the rule, according to an analysis from the National Association of Home Builders.
The NAHB and the Associated Builders & Contractors joined more than 50 other business groups in filing a separate lawsuit challenging the rule. Mazzant subsequently consolidated the two cases.
As the states sought a preliminary injunction, the business groups filed a motion for expedited summary judgment. Mazzant has yet to rule on the groups’ motion.
Mazzant’s injunction decision is a victory for the small business community, NAHB Chairman Ed Brady said in a Nov. 23 statement. He said the association hopes Mazzant will go on to “permanently kill” the rule.
The DOL “clearly overstepped its authority in issuing such a far-ranging rule that would hurt small businesses and the workers it was designed to help by forcing employers to scale back on pay and benefits, as well as cut workers’ hours,” Brady said.
Mazzant provided “relief from another overreaching and burdensome regulation” issued by the DOL, Kristen Swearingen, ABC’s vice president of legislative and political affairs, said in a Nov. 23 statement.
By “dramatically increasing” the minimum salary threshold for employees exempt from the Fair Labor Standards Act’s overtime pay requirements, the rule “would have taken workplace flexibility away from employees and may have required some employers to consider switching certain employees from salaried to hourly positions,” Swearingen said.
ABC has also said that by automatically updating the salary threshold every three years, the rule would create uncertainty for contractors on long-term projects by forcing them to speculate about employees’ future status.
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