Just in time for Thanksgiving, credit unions got something else to be thankful for after a federal judge on Tuesday night issued an injunction to a controversial Department of Labor overtime rule.
U.S. District Judge Amos Mazzant in Sherman, Texas, blocked the implementation of a rule set to take effect Dec. 1 that would have made millions more American workers eligible for overtime pay by nearly doubling the threshold for overtime pay for executive, professional and administrative employees from $23,660 to $47,476. More than 4 million people would have been impacted, and the rule – which was announced in May – was seen as one of President Obama's final opportunities to raise wages before he leaves office in January. With the injunction from Mazzant – an Obama appointee –the rule's implementation date is now indefinite.
Credit unions – state leagues as well as national trade associations – lobbied hard against the rule, claiming that it would negatively impact both credit union members and employees. In a June letter to a Congressional panel, Credit Union National Association CEO Jim Nussle wrote that the rule would "create regulatory burdens for credit unions when a disproportional percentage of employees are swept into the new threshold" and increase regulatory and compliance burdens for small CUs, as well as those in rural and underserved areas.
“We’ve felt from the beginning that the Department of Labor’s proposal was overbroad and extreme and could have unintended consequences on credit unions and other small businesses,” CUNA Chief Advocacy Officer Ryan Donovan said in a statement following the injunction's announcement. “We expressed our concern to the Department of Labor in our comment letter in September 2015 and we’ve been encouraging Congress to address this rulemaking ever since. We are pleased that the court has made its decision.”
Similarly, the National Association of Federal Credit Unions stated in May that while it was in favor of updating regulations in order to ensure wage fairness for all Americans, the trade association said it had concerns that the rule would "actually impede growth opportunities for many white collar workers."
After news of the injunction broke, NAFCU released a statement praising the injunction.
"This is a welcome delay for many small businesses, especially credit unions, that would not have been able to integrate this immense increase without impacting the services they provide," said Carrie Hunt, NAFCU EVP of government affairs and general counsel. "NAFCU and our members believe that this rule would have created major unintended consequences and obstructed growth opportunities for many white collar workers. Ultimately, in its current form, this rule could hurt the people it was trying to help."
