Obama administration unwavering on new overtimes rules; opponents seek congressional, court relief

As industry groups, attorneys general in 21 states and mostly Republican congressional officials look to the courts and legislation to block new federal overtime rules that go into effect on Dec. 1, the Obama administration has refused to budge on the far-reaching regulations to determine how much employees working more than 40 hours a week can be paid.

A week ago, by a vote of 246-177, the U.S. House approved the Regulatory Relief for Small Businesses, Schools, and Nonprofits Act, or HR 6094, that would give employers an extra six months to come into compliance with new overtime rules that by pushing the deadline back six months to June 1, 2017.

The bill, sponsored by U.S. Rep. Tim Walberg, R-Mich., is now headed to the U.S. Senate, where there is lukewarm support in advancing the legislation before the pre-Christmas deadline for the new rule takes effect. President Barack Obama has also vowed to veto the bill if the full Congress approves it and sends it to his desk.

In a statement following passage of HR 6094 in the U.S. House, President Obama’s White House Office of Management and Budget said delaying implementation of the Department of Labor’s (DOL) overtime rule until the middle of next year would endanger a critical step toward promoting higher pay and undermine efforts to allow workers to balance their work and family obligations.

“Since its creation, the 40-hour workweek has served as a cornerstone of the middle class. Yet over the past several decades, overtime protections have eroded as a result of inflation and lobbyists’ efforts to weaken them,” the OMB said. “Despite strong income growth in the last year, most American families have been squeezed by stagnant earnings during this period, and the lack of overtime protections only has put them at a further disadvantage.”

In May, the DOL issued the final rule on the overtime regulations that would raise the salary threshold, from $23,660 to $47,476 a year, under which most salaried workers are guaranteed overtime. In doing so, DOL officials said, it will extend overtime protections to 4.2 million additional Americans who are not currently eligible for overtime under federal law, boosting workers’ wages by $12 billion over the next decade.

After Dec. 1, all employees are entitled to overtime if they earn less than $913 a week – including government employees. The rule also will automatically update the salary threshold every three years, to ensure that it does not erode again and to make it harder for employers to misclassify workers to avoid paying the overtime pay they have earned.

DOL officials have said the final rule reflects input from hundreds of thousands of public comments and extensive stakeholder meetings with employers, business associations, small businesses, workers, advocates, nonprofit organizations, educational institutions, and state and local governments.

“While this bill seeks to delay implementation, the real goal is clear—delay and then deny overtime pay to workers. With a strong economy and labor market, now is a good time for employers to provide these essential protections for workers, who cannot afford to wait,” the OMB said.

ARKANSAS, BUSINESS REACTIONS
After the bill was approved by the U.S. House last week, U.S. Rep. French Hill, R- Little Rock, said he’s heard from businesses of all sizes, nonprofits, and colleges across Arkansas about the damaging effects the new overtime rule will have on local economies across the state.

“The simplest fix remains the administration abandoning the overtime rule in its current form, and working with Congress to conduct sound economic analysis to revamp the rule so that it reflects the differing needs of different industries and geographic regions in the United States. However, the administration has shown no interest in taking that action,” Hill said in a statement. “Enacting this common-sense, bipartisan bill would provide relief for those hit hardest by this unworkable rule while providing Congress the time we need to provide an effective solution.”

Despite the fact that the congressional fix is not likely to delay implementation of the new federal overtime rule, there are still two lawsuits in a Texas federal court that challenge the DOL’s authority to implement some portions of the Obama administration mandate.

On Sept. 20, Arkansas Attorney General Leslie Rutledge joined a coalition of 21 states in filing a lawsuit in U.S. District Court for the Eastern District of Texas challenging the DOL’s new overtime rule. The lawsuit, led by attorneys general in Texas and Nevada, asks the court to declare that the “new overtime rules and regulations are unlawful” because they exceed statutory rights, were enacted “without observance of procedure required by law,” are arbitrary and capricious, and are unlawful as applied to the States and their employees.

The AGs also asks for the federal court in Sherman, Texas, for declaratory relief, and a “permanent injunction” preventing the Labor Department from implementing, applying, or enforcing the new overtime rules and association regulations.

A companion lawsuit by the U.S. Chamber of Commerce, the National Retail Federation, the National Association of Manufacturers and a host of industry trade groups and local chambers was also filed against the DOL on Sept. 20 in the U.S. District Court in Texas.

“The Labor Department’s extreme and reckless changes to the overtime rules will hobble the career paths of millions of Americans trying to climb the professional ladder,” said David French, NRF’s senior vice president of government relations for the world’s largest retail trade group. “Retailers are already struggling to implement this new government mandate before the swiftly approaching deadline, and the automatic update included in the rule would make them do this same dance every three years for as long as they are able to remain in business. This is a massive government overreach of executive authority, and the courts need to put a stop to it.”

The U.S. District Court in Sherman, Texas, is scheduled to hear cross-motions for summary judgment on the consolidated lawsuits against the Labor Department on Nov. 17, two weeks before the new overtime rules will go into effect.