A coalition of twenty-one states and several businesses and industry groups, including the U.S. Chamber of Commerce, are suing to block the new overtime-pay requirements set to take effect in December. They argue that the new policy is unconstitutional, unduly burdens the states, and violates the Tenth Amendment, which reserves powers to the states. The lawsuit was filed in a Texas District Court and is available here.
The rule is designed to boost lower and middle-class wages by raising the salary threshold for overtime pay, and is considered a significant policy milestone for the Obama Administration. By the Department of Labor’s estimates, over four-million people will be impacted by the new rule, including 60,000 workers in Alabama. The rule applies to all employees, including managers, executives, and other professionals, unless they fall under an exempt occupational category.
Currently, salaried employees making $23,660 or more and complete some administrative tasks are exempt from overtime pay requirements under the Fair Labor Standards Act. However, that amount will increase to $913 a week, or $47,476 annually, in December. This will mean that employees who are salaried, but make less than $47,476, must be paid overtime when working more than 40 hours in a week. In response to the new threshold, the Department of Labor suggests employers can “A) pay time-and-a-half for overtime work; 2) raise workers’ salaries above the new threshold; C) limit workers’ hours to 40 per week; or D) some combination of [these].”
While the new rule will increase the wages for millions of workers especially in the food and retail industries, many employers have voiced concerns that the rule could have unintended negative consequences, including reducing workers’ hours and converting salaried employees into hourly employees.
The new rule will also index the salary threshold to keep pace with inflation by readjusting the threshold every three years. Some commentators believe the states are more likely to prevail on a challenge to this automatic update then the rule as a whole, arguing that future automatic updates could violate the Administrative Procedure Act which governs executive department rules.
For more information on overtime pay, check out our page on FLSA claims. If you have been unfairly denied hourly or overtime wages, contact our experienced attorneys for a free case evaluation. You may be able to recover back pay or even liquidated damages and costs on your claim for wages. As the statute of limitations limits the amount of time you have to file your claim, contact an experienced attorney soon after your claim arises.