The Justice Department on Tuesday formally ended the Obama administration's expansion of the federal overtime rule, by announcing it would not appeal a District Court's ruling that said the government overreached when it expanded the number of people covered by the rule.
The decision formally kills one of the previous administration's most far-reaching changes to labor regulations.
In a short court filing Tuesday, a Justice Department lawyer said District Court Judge Amos Mazzant's ruling last week that Labor Department lacked the authority to make the change would not be appealed by the department. The filing was reported by Bloomberg BNA.
Federal law says employees must be paid time-and-a-half once they work more than 40 hours in a week. However, businesses may exempt workers from the requirement if their duties are "managerial" in nature and they reach a certain salary threshold.
Last year, the Labor Department announced that that threshold, previously $23,000 annually, would rise to more than $47,000, and would be updated every three years to reflect wage growth. The administration's rule change would have meant that 4 million more workers would be eligible for overtime.
President Obama's administration said it was merely updating the Fair Labor Standards Act to reflect current employment policies. But business groups and several states opposed the rule and said it set the threshold too high. They challenged it in court and in November Mazzant stayed it.
Business groups cheered the Justice Department's move.
"The Obama administration's drastic changes to the federal overtime rule would have hurt small businesses and their employees. We applaud DOJ's decision to ask for a dismissal of the appeal. This will allow the U.S. Department of Labor (DOL) time to consider input from the business community to enact workable changes to these regulations," said Angelo Amador, executive director of National Restaurant Association's Restaurant Law Center.