The U.S. Chamber of Commerce has joined a broad coalition of more than 50 other national and Texas business groups that have filed a lawsuit challenging the new Department of Labor overtime rule. A second suit was filed by a coalition of 21 states in their role as employers.
The state of Kansas has joined the lawsuit. Your Chamber is also supportive of this lawsuit.
This week the U.S. House of Representatives passed H.R. 6094, a regulatory relief bill that would delay the effective date of the new overtime rule for six months until June 1, 2017. All members of the Kansas delegation voted in favor of the bill.
We understand that many of you may have questions about the lawsuit, its implications, and how it may impact your to plan for the coming change in employee compensation. To help address your questions on the legal challenge, the U.S. Chamber of Commerce has prepared answers to some frequently asked questions below.
Legal Challenge to the new Overtime Rule – U.S. Chamber of Commerce
Q: Who are the plaintiffs who filed the lawsuit?
A: The plaintiffs in the business groups’ diverse coalition include the Chamber of Commerce of the United States of America, the Texas Association of Business, more than 40 local chambers of commerce throughout the state of Texas and other business groups in Texas, and more than a dozen other sector-specific business groups.
Q: Why did the business groups file the lawsuit?
A: The Department’s unprecedented doubling of the minimum salary threshold for executive, administrative, or professional employees to be considered exempt from the overtime requirements of the Fair Labor Standards Act will have significant adverse effects on businesses, nonprofit groups and associations, and employees. The Department of Labor’s new overtime rule will impose significant new economic costs and limit workplace flexibility, impede career and promotion opportunities, and make it harder for businesses and nonprofits to expand to meet the needs of their customers and constituents. The new overtime rule will be particularly damaging to nonprofit organizations, including trade associations and chambers of commerce, that will be subject to the rule.
Q: What are the main legal arguments against the overtime rule?
A: The business groups’ lawsuit advances three legal arguments against the Department of Labor’s overtime rule: (1) the excessively high salary threshold contradicts the intent of Congress to have executive, administrative, and professional employees exempt from overtime; (2) the new automatic update provision, which would impose new salary thresholds every three years without going through rulemakings, is not authorized by the FLSA, and in fact the FLSA directs the secretary to make changes to these exemptions through the notice and comment regulatory process; and (3) the Department acted arbitrarily and capriciously in promulgating its new overtime rule, in violation of the federal Administrative Procedure Act.
Q: What other steps has your organization taken regarding the DOL’s new overtime regulation?
A: The U.S. Chamber and its federation of state and local partners have been highly active in this rulemaking from the outset. We met with the Secretary of Labor before the regulation was proposed, submitted extensive and comprehensive comments describing in detail the problems this regulation will cause, and have explained at every step how the Department has gone too far. The Chamber and its federation partners also sent a letter to Congress urging action to provide relief from this regulation. The letter had almost 370 groups signed on.
Q: Will this lawsuit impact the December 1st date that the DOL rule is scheduled to go into effect?
A: While the Chamber’s suit seeks to invalidate the regulation, when or how the court will rule on this suit is impossible to predict at this point, therefore we recommend that businesses continue to prepare to be in compliance by December 1st. We will continue to provide updates as the suit moves forward.
Please contact me or the Chamber’s Government Relations Department if you have additional questions or concerns.