Nevada workers pay cut

A court ruling against a federal rule, adopted during the Obama administration to update a 40-year-old threshold for overtime pay, has cost more than 104,0000 Nevada workers a lot, a new study finds.

The report by the New York City-based National Employment Law Project—released last week—found 16,994 workers in Washoe County, 9,043 in the small counties, and 78,106 in Clark County were adversely affected when the rule was overturned by a Texas judge at the initiative of Nevada Attorney General Adam Laxalt.

Laxalt recruited 20 state attorneys general to sue the U.S. Labor Department over the rule that would have doubled to $47,500 the maximum salary a worker can earn and still be eligible for mandatory overtime pay. That threshold had not been changed in four decades, and the Obama action provided for it to be updated automatically every five years. Nevada Current reported on Sept. 14, “In 1975, 62 percent of middle-class workers were automatically eligible for overtime after working more than 40 hours in a week. Today that number has dwindled to 7 percent, according to the Economic Policy Institute. Under the 2016 rule change, 35 to 40 percent of workers would have been eligible for overtime, according to the report and other sources.”

In the case State of Nevada vs. U.S. Department of Labor, a federal judge in Texas, Amos Mazzant, issued a temporary injunction against the rule on Nov. 22, 2016 and then later—on Aug. 31 2017—issued a permanent ruling that found the rule invalid, saying, “Congress intended for employees who perform ‘bona fide executive, administrative, or professional capacity’ duties to be exempt from overtime pay.” The threshold was set too high, Mazzant found, to the point that it could pull in some management employees who are exempt from overtime protections. In addition, he found the Labor Department lacked authority to use a salary test to set the threshold.

At the time of the Mazzant ruling, Laxalt told NBC News, “Businesses and state and local governments across the country can breathe a sigh of relief now that this rule has been halted.” The National Restaurant Association and U.S. Chamber of Commerce were among groups who supported the suit.

Workers were less thrilled, and the Trump administration sent mixed signals on it. The lost income presumably substantially reduced consumer spending in Nevada, sapping the state’s economy.

The Labor Department, which spent two years developing the rule and received 300,000 public comments on it, issued a statement: “The department’s overtime rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule.”

Although Donald Trump has overturned many Obama-era actions, the Labor Department rule was expected to stand or be modified by Congress—until Laxalt’s intervention. The New York Times reported, “Some business lobbyists had anticipated a legislative compromise that phased in the new limit over a longer period of time and eliminated an automatic increase in the limit every three years.”