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Congress and States Fight Overtime Rule

The Department of Labor’s overtime rule scheduled to go into effect a month and a half from now is facing several legislative and legal challenges.

On Dec. 1, the salary threshold for when overtime must be paid will increase to $913 per week, or $47,476 annually, doubling the current limit of $455 per week, or $23,660 a year.

After it was announced in May the rule drew opposition in Congress and from employer groups, who say it needs to be delayed. They argue that DOL needs the time to perform adequate studies into the rule’s impact on employment, especially among smaller employers (AA 8-31-16, P. 5).

At the end of September, the U.S. House of Representatives passed a bill by 246-177 that would delay implementation of the rule by six months.

However, even if the legislation passes the Senate it is likely that President Obama would veto it.

In the meantime, 21 state governments have filed suit against DOL seeking to block the rule. The suit says the rule is unconstitutional because it allows the federal government to force states to shift their limited resources from other important priorities they would otherwise pursue in order to meet the increased labor costs.

The cost burden also is cited by the industry groups who filed their own lawsuit against DOL. Led by the U.S. Chamber of Commerce, the suit was filed by more than 50 groups, including the National Automobile Dealers Association, National Association of Manufacturers and National Retail Federation

This lawsuit argues that Congress did not authorize DOL to index the salary level to the rate of inflation, contrasting it to other statutes that expressly authorize such cost-of-living increases.

The suit notes that the Labor Department itself admitted in a different rulemaking in 2004 that automatic indexing was contrary to congressional intent. The department later reversed its position in this regard when it wrote the new overtime rule finalized in May.

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