More Lawsuits Challenge Overtime Rule

Two recent lawsuits in Texas challenge the U.S. Department of Labor’s (DOL’s) new overtime rule, attempting to block it. In addition, Congress has introduced a resolution to block the regulation.

The rule is set to take effect in two phases of raising the salary threshold for white-collar exemptions from overtime requirements: first from $35,568 per year to $43,888 per year on July 1 and then to $58,656 per year on Jan. 1, 2025. A dozen business groups last month also brought a lawsuit to challenge the regulation. We’ve gathered articles on the news from SHRM Online and other outlets.

Rule Allegedly Improperly Issued

The New Civil Liberties Alliance brought a lawsuit in the U.S. District Court for the Northern District of Texas, alleging that the rule was improperly issued by Acting Labor Secretary Julie Su because she hasn’t been confirmed by the U.S. Senate.

(Bloomberg Government)

Authority to Add Salary Requirement Challenged

In another lawsuit filed against the DOL in the U.S. District Court for the Eastern District of Texas, the state of Texas argued that the DOL lacked statutory authority to add any minimum salary requirement to the white-collar exemption. It said the salary requirement would exclude millions of employees from being exempt, even though they are employed in a bona fide executive, administrative, or professional capacity.

Texas also argued that the overtime rule was unconstitutional as applied to states.

(Texas’ complaint)

[Related Resource: SHRM Annual Conference & Expo 2024 concurrent session “Wage and Hour Compliance: A DOL Update and Ways to Avoid Common FLSA Overtime Liability Landmines”]

Business Groups’ Claim

The recent lawsuit was filed in the same Texas court—the U.S. District Court for the Eastern District of Texas—that struck down a similar overtime rule issued by the Obama administration that sought to raise the salary threshold to $47,476. After blocking the rule in 2016, Judge Amos Mazzant found in a 2017 ruling that the DOL rule focused so much on salary level to determine whether a worker was exempt from overtime that it eliminated the consideration of their job duties.

The latest lawsuit argues that the new rule ignores that precedent. The business groups suing over the rule include the American Hotel and Lodging Association, the Associated Builders and Contractors, and the National Retail Federation.

(SHRM Online)

Congressional Resolution Seeks to Block Rule

Rep. Tim Walberg, R-Mich., sponsored a resolution of disapproval under the Congressional Review Act in the Republican-controlled U.S. House of Representatives. If passed and signed into law, the resolution would nullify the overtime rule. However, this effort has slim chances of succeeding because the legislation would likely face a veto by President Joe Biden if it passes the House and Senate.

(HuffPost)

Requirements for White-Collar Exemption

To be exempt from overtime under the Fair Labor Standards Act’s executive, administrative, and professional exemptions—the so-called white-collar exemptions—employees must be paid a salary of at least the threshold amount and meet certain duties tests. If they are paid less or do not meet the tests, they must be paid 1.5 times their regular hourly rate for hours worked in excess of 40 in a workweek.

(SHRM Online)