Federal Overtime Rule Faces More Challenges

WASHINGTON, D.C. — A bill to delay the new federal overtime rule came up for debate in the U.S. House of Representatives as the Dec. 1 implementation date nears. 

On Sept. 29, the House Rules Committee debated proposed legislation, introduced by Republican Rep. Tim Walberg (R-Mich.), that would delay the changes by six months, according to the InsideSources.com.

"We all agree our nation's overtime rules need to be updated and modernized," Walberg stated before the committee, adding, "the administration should withdraw the rule completely and update our laws responsibly. Unfortunately, the clock is ticking. A six-month delay provides much needed relief."

The Protecting American Workplace Advancement and Opportunity Act, introduced by Senators Tim Scott (R-S.C.) and Lamar Alexander (R-Tenn.) as S. 2707, and by Walberg and John Kline (R-Minn.) as H.R. 4773, would direct the Department of Labor (DOL) to go back to the drawing board with its overtime proposal, as CSNews Online previously reported.

The debate came one week after two legal challenges were brought against the new rule.

On Sept. 20, the U.S. Chamber of Commerce filed a legal challenge to the Obama Administration's overtime rule, arguing that DOL exceeded its statutory authority in issuing the regulation and violated the Administrative Procedure Act.

The U.S. Chamber is leading a broad coalition including the Texas Association of Business, National Automobile Dealers Association, the National Association of Manufacturers, National Association of Wholesaler Distributors, National Federation of Independent Business, National Retail Federation, and more than 50 other national and Texas business groups.

 "The DOL went too far in the new overtime regulation," said Randy Johnson, senior vice president of labor, immigration, and employee benefits for the U.S. Chamber. "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," Johnson explained.

The suit charges that, by setting an excessively high salary threshold for determining who qualifies as "executive, administrative and professional employees," the rule departs from the intent established by Congress in the Fair Labor Standards Act and consistently administered by DOL for more than 75 years, according to the U.S. Chamber.

In addition, DOL ignored regional and industry differences that have previously been acknowledged, resulting in a "one-size-fits-none" salary threshold. The suit also argues that the provision to automatically update the salary threshold every three years without a rulemaking or taking input from affected parties is not authorized by the Fair Labor Standards Act or any other relevant statute.

Also last week, a second lawsuit was filed by the attorneys general of 21 states in U.S. District Court in Eastern Texas, as CSNews Online previously reported.

The Obama Administration unveiled the new rule in May. The most notable change announced will be a nearly doubling of the current salary threshold from its current $23,360 to $47,476, under which virtually all workers will be eligible for time-and-a-half pay. This change would make nearly 5 million currently exempt employees eligible nationwide. 

Under the new rule, states are still empowered to enact their own statutes that differ from the new federal regulations. However, businesses are subject to whichever requirements are more generous to employees.