SHERMAN, Texas -- The National Retail Federation (NRF) and other retail groups have filed a lawsuit on behalf of the millions of employers—including convenience stores and restaurants—and their employees who will be drastically affected if the U.S. Department of Labor’s (DOL) changes to the federal overtime rules go into effect on Dec. 1. A coalition of 21 state attorneys general also has filed a lawsuit challenging the new overtime rule.
Legislation introduced on Sept. 21 by Rep. Tim Walberg (R-Mich.) would extend the deadline for the Department of Labor Overtime Rule to June 1, 2017.
On March 13, 2014, President Barack Obama ordered the DOL to revise the Fair Labor Standards Act’s overtime exemption for executive, administrative and professional employees—the “white collar” exemption—to account for the federal minimum wage. On May 23, 2016, the DOL issued the final new overtime rule. It doubles the salary-level threshold for employees to be exempt from overtime, regardless of whether they perform executive, administrative or professional duties. After Dec. 1, all employees are entitled to overtime if they earn less than $913 a week.
The new rule also contains a mechanism to automatically increase the salary level every three years without going through the standard rule-making process required by federal law.
If implemented, the new rule would more than double the minimum salary cutoff under which employers must pay overtime to their employees, the lawsuits say, and will force small businesses to substantially increase their employment costs at the expense of their budgets and services. The rule will also likely lead some employers to reclassify employees as hourly workers with the potential of reduced hours and pay. Layoffs may even be necessary, the AGs said.
The complaints, filed in U.S. District Court for the Eastern District of Texas, Sherman Division, urges the court to prevent the implementation of the new rule before it takes effect.
“The Labor Department’s extreme and reckless changes to the overtime rules will hobble the career paths of millions of Americans trying to climb the professional ladder,” said David French, NRF's senior vice president for government relations. “Retailers are already struggling to implement this new government mandate before the swiftly approaching deadline, and the automatic update included in the rule would make them do this same dance every three years for as long as they are able to remain in business. This is a massive government overreach of executive authority, and the courts need to put a stop to it.”
Click here to view the NRF filing.
The AGs filing the separate lawsuit represent the states of Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah and Wisconsin.
Click here to view the AG filing.
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