As previously reported here, the Department of Labor’s expansion of overtime rules for employees earning a salary of less than $913 per week is set to take effect on December 1, 2016. Employers are scrambling to figure out how to handle this change, which doubles the minimum wage amounts for employees to be exempt from overtime provisions.
Meanwhile, 21 states, including Ohio, and 50 business groups have filed two separate but similar lawsuits to delay or prevent the rules from becoming effective. Both lawsuits have been filed in the Eastern District of Texas and are pending before U.S. Federal Judge Ron Clark.
The lawsuit filed by the states, captioned Nevada v. United States Department of Labor, argues the new regulations were improperly implemented and seeks an injunction preventing their enforcement. The business groups, in a suit captioned Plano Chamber of Commerce v. Perez, in which several chambers of commerce have joined with national business groups including the National Association of Manufacturers, National Retail Federation, and the National Federation of Independent Businesses, make similar arguments. In addition to complaints about the amount of the initial increase in the minimum salary threshold, the business groups argue that business will need to go through burdensome reevaluation procedures every three years due to the automatic rate changes built into the law. It is expected that the court will issue an initial ruling before the December 1 effective date.
While businesses and states have taken their complaints to the court for determination, Congress is attempting to block enforcement of the new regulations. On September 20, 2016, the House of Representatives voted in favor of a bill that would delay the enforcement of the regulations until June 1, 2017. That bill, titled “Regulatory Relief for Small Businesses, Schools, and Nonprofits Act” is now before the Senate.
Despite the various actions to delay or avoid enforcement of the new regulations, employers should continue to prepare for the possibility that the overtime regulations will not be delayed. Unless and until either the federal court cases rules to suspend enforcement, or the pending Act is passed into law, the overtime rules will become effective on December 1, 2016.