Wednesday, September 21, 2016

When is December 1 not December 1? When two lawsuits challenge the new overtime rules.

On December 1, the Department of Labor’s new salary test for exempt employees is set to take effect, raising the salary level to qualify for certain white collar overtime exemptions from $455 per week to $913 per week.

That is, it is set to take effect if the two lawsuits filed yesterday don’t delay or outright stop the rules from taking effect.

Yesterday, Ohio joined Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, New Mexico, Oklahoma, South Carolina, Texas, Utah, and Wisconsin in a lawsuit [pdf] against the United States Department of Labor, its secretary, and other federal officials seeking to halt the new overtime rules.

Separately, but in the same court, a coalition of more than 50 business groups, including the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Retail Federation, National Automobile Dealers Association, and the National Federation of Independent Business, also filed a similar lawsuit [pdf].

The U.S. Chamber summarizes the opposition to the impending overtime rule:
The DOL went too far in the new overtime regulation. We have heard from our members, small businesses, nonprofits, and other employers that the salary threshold is going to result in significant new labor costs and cause many disruptions in how work gets done. Furthermore, the automatic escalator provision means that employers will have to go through their reclassification analysis every three years. In combination, the new overtime rule will result in salaried professional employees being converted to hourly wages, and it will reduce workplace flexibility, remote electronic access to work, and opportunities for career advancement.
Now it is up to a federal judge in Sherman, Texas, to decide whether, and when, the new FLSA’s new salary threshold takes effect.

We are a mere 71 days before these new regulations are to take hold. It remains to be seen what impact, if any, this lawsuit has on these regulatory changes. Given that these lawsuits could have been filed in just about any federal court, one must assume that their is some logic to the filing in the Eastern District of Texas and some belief that its forum will be favorable to the plaintiffs. We should get some guidance in advance of December 1 on the requests for preliminary injunctive relief.

Stay tuned, and continue to watch this space for updates on this significant development.