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States, Chambers of Commerce Challenge DOL Overtime Rule

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States, Chambers of Commerce Challenge DOL Overtime Rule

September 26, 2016
On September 20, twenty-one states and dozens of Chambers of Commerce (and other industry groups) filed separate but related lawsuits (attached below) challenging the Department of Labor's (DOL's) final Overtime Exemption rule. The suits were filed in the United States District Court for the Eastern District of Texas, Sherman Division. The states challenge the rule on several points, including the contention that the rule means that the federal government is compelling states to pay state government employees in a manner that violates the constitution. The complaint argues that the automatic updating mechanism is contrary to Congressional intent in drafting the Fair Labor Standards Act (FLSA). It goes on to argue that prior precedent from Supreme Court decisions should be overturned, and the rule invalidated. 
 
The second suit, filed by business groups, puts forth the same argument regarding the automatic updates to the threshold. It further argues that the DOL has exceeded the scope of its authority by extending new requirements to businesses and employees that formerly were considered exempt. 
 
Department of Labor Secretary Thomas Perez came out quickly with a statement condemning the lawsuits and supporting the rule. In his statement, Secretary Perez said,"We are confident in the legality of all aspects of our final overtime rule. It is the result of a comprehensive, inclusive rule-making process. Despite the sound legal and policy footing on which the rule is constructed, the same interests that have stood in the way of middle-class Americans getting paid when they work extra are continuing their obstructionist tactics. Partisan lawsuits filed today by 21 states and the U.S. Chamber of Commerce seek to prevent the Obama administration from making sure a long day’s work is rewarded with fair pay. The overtime rule is designed to restore the intent of the Fair Labor Standards Act.”
 
ANCOR will continue to monitor the lawsuits, and notes that a recent, similar lawsuit challenging another DOL rule on grounds that the department exceeded its authority was struck down, setting recent precedent in favor of the DOL. If the district court finds in favor of the states and Chambers, there will be an appeal to a higher court. The process is likely to take months to years to fully resolve. ANCOR recommends that providers assume that the rule's effective date still applies unless or until a court rules otherwise. As always, providers are advised to seek the advice of legal counsel to determine the scope of their obligations as employers under the FLSA.