States Sue to Stop Overtime Rule from Taking Effect

Last week, 21 states joined in a lawsuit to stop the U.S. Department of Labor’s overtime rule from becoming effective on December 1, 2016.

The states, led by Texas, allege that the new rule would violate the Fair Labor Standards Act (FLSA) by making “the type of work actually performed … a secondary consideration while dangerously using the ‘salary basis test,’ unencumbered by limiting principles, as the exclusive test for determining overtime eligibility for [executive, administrative and professional] employees.” The lawsuit further alleges that the rule’s mechanism for increasing the salary level every three years is unlawful, as it violates the FLSA, which only calls for changes to be made “from time to time.”

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 the lawsuit in the U.S. District Court for the Eastern District of Texas, which blocked the Obama administration’s bathroom mandate just last month.

“We are confident in the legality of all aspects of our final overtime rule,” U.S. Labor Secretary Thomas E. Perez said in a statement. “The overtime rule is designed to restore the intent of the Fair Labor Standards Act, the crown jewel of worker protections in the United States.”

Given the timing of the lawsuit, it is unlikely the new rule will be enjoined before December 1, its effective date. Accordingly, employers should continue to plan for the new rule to take effect as scheduled.