On Tuesday, September 20, 2016, 21 U.S. states filed a lawsuit in the U.S. District Court for the Eastern District of Texas claiming the Department of Labor’s new salary threshold rule to extend mandatory overtime pay to more than 4 million workers will place a heavy burden on state budgets. The rule, set to take effect Dec. 1, will require employers to pay overtime to salaried workers earning less than $47,476 a year, double the current threshold of $23,660. Critics say the rule will force employers to demote salaried workers to hourly positions and create more part-time jobs.
Subsequently, the U.S. Chamber of Commerce and other business groups filed a separate challenge to the rule in the same federal court. Both lawsuits allege the Department of Labor abused its authority by increasing the salary threshold so drastically, and also failed to account for regional variations in the cost of living. The states also argue that an increase to the salary standard every three years deprives the opportunity for feedback about those future changes as well confusing congressional intent of the statute.
The states involved in the litigation thus far are: Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah and Wisconsin.
Check the McMahon Berger blog for further updates as this litigation evolves. If you have a question, the St. Louis employment attorneys at McMahon Berger have been representing employers across the country in labor and employment matters for over sixty years, and are available to discuss these issues and others. As always, the foregoing is for informational purposes only and does not constitute legal advice regarding any particular situation as every situation must be evaluated on its own facts. The choice of a lawyer is an important decision and should not be based solely on advertisements.