Court blocks expansion of overtime pay rule after states sue

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LAS VEGAS — A federal court is blocking the start of a rule that would have made an estimated 4 million more American workers eligible for overtime pay beginning Dec. 1.

The court says the Department of Labor’s rule exceeds the authority the agency was delegated by Congress.

The ruling is a major blow to the Obama administration, which wanted to shrink the so-called “white collar exemption” that allows employers to skip overtime pay for salaried administrative or professional workers who make more than about $23,660 per year.

Businesses had been scrambling to prepare for the onset of the Fair Labor Standards Act, which changes the threshold for overtime pay to $47,476. Under the new rule, salaried workers who make less than that would have been eligible for overtime pay when they work more than 40 hours in a week.

The salary threshold will be updated every three years. Based on projections, it is expected to rise to $51,000 by January 1, 2020, after the first update.