Fed Judge Blocks President’s Overtime Change, Winning Praise From Small Businesses

Fed Judge Blocks President’s Overtime Change, Winning Praise From Small Businesses
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OCEAN CITY – Ocean City area businesses received a reprieve this week after U.S. District Court Judge Amos Mazzant granted a national injunction against new overtime rules that take effect Dec. 1.

The Department of Labor (DOL) is expected to appeal the injunction, according to Vanessa Sinders, senior vice president of the American Hotel and Lodging Association’s (AHLA) Government Affairs. But the new rules cannot go into effect until the appeal is heard.

“AHLA has actively worked with the broader business community since this rule was first announced to advocate for a more reasonable approach, and today’s news represents a significant victory for our industry and small businesses across the country,” Sinders said. “Beyond substantial outreach to Congress to push for change, AHLA also submitted extensive comments for the record to the DOL arguing that the regulation did not consider regional economic disparities and that the proposed increase was too high and too fast and not immediately absorbable for many small businesses.”

Susan Jones, executive director for the Ocean City Hotel-Motel-Restaurant Association (OCHMRA), said the ruling was a victory for businesses.

“We were delighted to read of the judge blocking the rule, as we feel the limits and thresholds were raised too drastically,” she said.

Currently, white collar salaried workers with administrative duties making more than $455 a week are not eligible for overtime pay. With the new guidelines, however, this threshold will nearly double to $913 a week, make four million more employees eligible for overtime pay for time worked over 40 hours, according to the DOL.

The idea of the new guidelines is to raise low and middle-class incomes, a goal set in place by President Barack Obama’s administration.

In recent months, the Greater Ocean City Chamber of Commerce and the OCHMRA partnered with attorneys and the Maryland Department of Labor, Licensing and Regulation to host overtime seminars that inform local businesses about the new rules.

Business owners, however, used the seminars to voice concerns about the new guidelines and their inability to shoulder the financial changes.

At the second seminar Nov. 16, Chamber Executive Director Melanie Pursel shared news of the possible injunction with attendees. However, attorney David Stevens said it was unlikely that the national injunction would pass.

The irony of Tuesday’s decision focuses on Mazzant, who was appointed by Obama, Jones said.

More than 50 national organizations, including the AHLA, filed lawsuits against the DOL in the Northern District of Texas Sept. 20, stating the overtime laws violated the Administrative Procedure Act.

That same day, 21 state’s attorney generals filed a similar lawsuit in the same court and were joined with the organizations to form one case.

On Tuesday, Mazzant granted the requested injunction, which will bar the DOL from implementing the new rules on Dec. 1 as planned.

“The State Plaintiffs’ proposed preliminary injunction seeks to enjoin the Department from implementing its Final Rule on Dec. 1, 2016,” the opinion reads. “The State Plaintiffs allege that, in the absence of a preliminary injunction, the significant cost of complying with the Final Rule will cause irreparable injury. The State Plaintiffs offer many examples of such costs. They submit declarations from seven state officials who estimate it will cost their respective states millions of dollars in the first year to comply with the Final Rule. The Department agrees the Final Rule will cause increased costs.”

The injunction ruling continued, reporting, “Finally, the Court has authority to enjoin the Final Rule on a nationwide basis and decides that it is appropriate in this case, and therefore grants the State Plaintiffs’ Emergency Motion for Preliminary Injunction.”

In the ruling, the court justified its decision and use of an injunction.

“A nationwide injunction is proper in this case,” the opinion reads. “The Final Rule is applicable to all states. Consequently, the scope of the alleged irreparable injury extends nationwide. A nationwide injunction protects both employees and employers from being subject to different EAP exemptions based on location.”

Jones said she has informed OCHMRA members of the ruling and will wait to hear the results of the final decision on the new overtime laws.

“It is definitely a favorable ruling for businesses,” she said. “We definitely follow the play of state and national organizations on this issue.”

About The Author: Bethany Hooper

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Bethany Hooper has been with The Dispatch since 2016. She currently covers various general stories. Hooper graduated from Stephen Decatur High School in 2012 and the University of Maryland in 2016, where she completed double majors in journalism and economics.