21 States Challenging Department of Labor Overtime Rule

On September 20, 2016, 21 states – Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah, and Wisconsin – filed suit against the United States federal government, specifically the Department of Labor, challenging its new rule of overtime exemption.[1]  The group of states argue that the agency unconstitutionally overstepped its authority to establish a minimum salary level for workers in the white collar group.[2]

The new rule, which will become effective on December 1, 2016, dictates that it will (1) raise the salary threshold indicating eligibility from $455/week to $913 ($47,476 per year); (2) automatically update the salary threshold every three years, based on wage growth over time; (3) strengthen overtime protections for salaried workers already entitled to overtime; and (4) provide greater clarity for workers and employers.[3]

However, the 21-state group argues that the worker’s salary level does not reflect the kind of work an employee actually performs.[4] They argue that the Department of Labor regulation does not consider the text of the Fair Labor Standards Act by setting a salary threshold without even considering whether an employee of a state or private company is actually performing actual executive, professional or administrative roles.[5]

Furthermore, the 21-state group also takes on the issue of the new rule’s automatic indexing mechanism where the threshold salary level will increase every three years.[6] They argue that the automatic increase would not reflect the country’s economic conditions or the effect on government and private resources.[7] They claim that by requiring states to increase state funds to pay state employee salaries or overtime violates the constitution by depleting state resources by the federal government. [8]

Since the new rule would bring upon a lot of burden to both government and private employers, it would be noteworthy to keep an eye out for how the case proceeds since if the court rules for the states, that would mean that the new rule cannot be implemented, thus keeping the status quo of the current rule on overtime pay.

~Author: Yu Up Lee, Emory School of Law 3rd Year Law Student

[1] Jess Davis, Dozens Of States, Biz Groups Challenge DOL Overtime Rule, Law 360, Sept. 2016, at 1.

[2] Id.

[3] THE OVERTIME RULE, https://www.dol.gov/featured/overtime/ (last visited Oct. 24, 2016).

[4] Davis, supra, at 1.

[5] Id.

[6] Id.

[7] Id.

[8] Id.