The new overtime rules, which will go into effect December 1, have been challenged by two lawsuits this past week. The first suit against the Department of Labor and its Wage and Hour Division was filed by a coalition of 21 states, lead by Texas and Nevada. The second is from a collective group of business groups lead by the U.S. Chamber of Commerce.
In both lawsuits, the groups claim that the DOL was "arbitrary and capricious" in adopting a higher minimum salary threshold for exempt employees. They also argue that the automatic salary adjustments every three years, or the "escalator provision," violates the Administrative Procedures Act provision for "notice and comment" rule making when Fair Labor Standards Act (FLSA) guidelines are altered.
Essentially, the lawsuits claim that the new overtime rules place an unreasonable burden on employers and on state budgets. The rule will require employers to pay overtime to salaried workers who make less than $47,500, more than double the current cutoff of $23,660. The lawsuits claim that drastic of a change in salary thresholds is an abuse of authority on the part of the DOL.
U.S. Labor Secretary Thomas Perez says that these lawsuits are an attempt to deprive workers of fair pay. Currently only 7 percent of full-time salaried employees are eligible for overtime pay, down significantly from 62 percent in 1975.
"I look forward to vigorously defending our efforts to give more hardworking people a meaningful chance to get by," Perez said in a recent Time article.