Federal court blocks expansion of overtime pay rule after states sue

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LAS VEGAS (AP) - 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. Under the Fair Labor Standards Act, salaried workers who make less than $47,500/year would become eligible for overtime pay when they work more than 40 hours a week.

The White House said the 40-hour workweek has eroded over the years with more workers putting in more time and not getting compensated.

Companies are anticipating higher payroll costs by paying out more in overtime or raising the salaries of employees so they reach the $47,500 threshold so they can still be exempt.

Twenty-one states and dozens of business groups sued to block the new law from taking effect.

The salary threshold is set to be updated every three years, with it expected to increase to $51,000 by Jan. 1, 2020.

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