A Texas Judge Denies Giving a Raise to Millions of Americans

Federal Judge Amos Mazzant of the Eastern District of Texas issued a nationwide injunction yesterday against an Obama administration regulation expanding by millions the number of workers who would be eligible for time-and-a-half overtime pay. This means that the rule change that was set to go into affect on December 1st has been halted.

In order to understand what is happening and why this is important, it is helpful to know some things about the law this ruling is based on – the Fair Labor Standards Act (FLSA). Passed in 1938, it instituted many of the protections that we’ve come to take for granted today. FLSA instituted the 40 hour work week, established a federal minimum wage and prohibited child labor. But it is important to keep in mind – especially when it comes to the rules about overtime pay – that it was based on assumptions about the labor force that were prevalent almost 80 years ago. For years now, it has been clear that much has changed since that time and the law requires updating in order to accommodate the work force of today. But the progressive dominance of Congress in the 1930’s is not something we’ve seen in recent history. So that’s not likely to happen.

Under FLSA, employees are split between those who qualify for overtime pay (non-exempt) and those who don’t (exempt). The law establishes three conditions for those who are exempt:

  1. Those who have executive, administrative or professional duties
  2. Those who are paid on a salary basis (rather than hourly)
  3. Those who meet a minimum salary level

During my years as the director of a non-profit, I dealt with the headaches created about that when so many of our employees met one of those conditions, but not the other two. There has never been much guidance about which one takes precedence. An employment lawyer once tried to sum up the impact of all three by telling me that the basic difference is that those who qualify for overtime are hired to work a schedule and those who don’t are hired to complete a task. But there were times (i.e., staff who provided counseling in a 24/hour crisis program – many of whom were well-paid and had Master’s degrees – who worked a schedule) when that distinction wasn’t much help. I say all that to demonstrate both how much these laws are in need of an update from the industrial age and to tee up why Judge Mazzant’s ruling makes no sense. Here is what he said about those three conditions:

The salary level was purposefully set low to “screen out the obviously nonexempt employees making an analysis of duties in such cases unnecessary.”…But this significant increase to the salary level creates essentially a de facto salary-only test.

In other words, the minimum salary level should be made irrelevant (“set low”) in order to prioritize #1 – a determination of those who have executive, administrative or professional duties. In a fact sheet about the importance of raising the minimum threshold for overtime pay, the Economic Policy Institute provides a couple of examples of how employers often use that condition to exploit their workers.

…an assistant manager at a fast-food restaurant with a salary of $24,000 and who spends 95 percent of his (or her) time cooking fries, running a cash register, and sweeping floors can be required to work 60 or 70 hours a week and yet be denied any overtime pay, simply because he’s classified as a manager. On the weeks he works more than 64 hours, his effective hourly wage is below the federal minimum wage of $7.25; workers who are exempt from overtime regulations are also exempt from minimum-wage regulations.

Similarly, a recent college graduate with a salary of just $35,000 might be regularly required to work 70 hours per week as a junior accountant with no prospect of additional pay, simply because her employer deems her a “professional” who is exempt from overtime regulations.

Beyond that, Judge Mazzant is simply wrong to suggest that “this significant increase to the salary level creates essential a de facto salary-only test.” First of all, the salary test hasn’t been raised since the Ford administration. So it hasn’t kept up with inflation. That’s why Vice President Biden said that “more than 60 percent of salaried workers qualified for overtime in 1975 based on their salaries, but only 7 percent do today.”

Beyond that, as Jared Bernstein pointed out, the Obama administration was meticulous in reviewing data about where to set the new salary test. Here’s just one of the things they considered:

The Bureau of Labor Statistics publishes data on supervisory workers by occupation and median weekly earnings (bona fide supervisors should typically be exempt from OT). For management occupations, the BLS breaks out four levels of supervisory responsibilities, and the median weekly earnings range from $1,520 to $3,995. In other words, by this metric, the new threshold is well below a level associated with supervisory, and presumably exempt, duties on the job.

For those of you who have followed me through all of these specifics on the law, it’s application and the problem with Judge Mazzant’s ruling, we’re left with only one thing to consider about how/why this happened. Laurel Brubaker Calkins provides the critical ingredient.

It’s the fourth time in 21 months that a federal judge in Texas has issued a nationwide injunction blocking one of President Barack Obama’s executive orders. Other stalled Obama initiatives involve shielding undocumented immigrants from deportation, mandating bathroom access for transgender students, and requiring labor-violation disclosures by federal contractors.

In other words, there is a pattern here. In his book, The Great Suppression: Voting Rights, Corporate Cash, and the Conservative Assault on Democracy, Zachary Roth identifies the myriad of ways that conservatives are going about dealing with the fact that they are now in the minority. One of them is via an embrace of judicial engagement.

But as Roth explains, the deeper issue at work here is to elevate property and economic rights to be on par with other rights, like free speech. The goal is to strike down laws that regulate business or protect workers in favor of “liberty” for corporations. Or as Roth puts it: “All of a sudden activist judges are the last line of defense against the mob.”

I have no illusions that president-elect Trump will take up the cause of fighting for this important rule change that would be such a boost to those who actually voted for him. But to the extent that those voters were motivated by economic anxiety, this would be a pretty good place for them to take a stand with those they put into office. It comes down to whether or not “the mob” is actually ready to flex its muscle on the root causes of economic inequality or if they are content to simply shake their fists in anger during a presidential election and move on.

Nancy LeTourneau

Nancy LeTourneau is a contributing writer for the Washington Monthly.