Money & Business

ASAE Joins Lawsuit Challenging Overtime Rule

By / Sep 22, 2016 (iStock/Thinkstock)

With the December 1 effective date for the new rule approaching, ASAE, the U.S. Chamber of Commerce, and other organizations went to court this week seeking to block it while Congress considers an alternative phase-in approach to expanding overtime eligibility.

While continuing to press for a legislative solution to the Obama administration’s pending overtime rule, ASAE earlier this week joined the U.S. Chamber of Commerce and numerous other organizations in a lawsuit to block the rule from taking effect on December 1.

The costs of compliance will force many smaller employers and nonprofits operating on fixed budgets to cut critical programming, staffing, and services to the public.

The final rule, announced by the U.S. Department of Labor (DOL) in May, raises the threshold for employees who are exempt from overtime pay to $47,476—more than double the current salary threshold of $23,660.

The lawsuit [PDF], filed this week in the U.S. District Court for the Eastern District of Texas, argues that DOL exceeded its authority under the Fair Labor Standards Act by drastically altering the minimum salary requirements for exemption and by establishing an automatic increase in the salary threshold every three years, to take place without notice or public comment.

ASAE does not oppose an adjustment to the current overtime threshold but has expressed concern that the new rule as written would adversely affect nonprofit organizations and other employers with limited revenues and could harm affected employees as well.

“The costs of compliance will force many smaller employers and nonprofits operating on fixed budgets to cut critical programming, staffing, and services to the public,” the complaint says. “Many employers will lose the ability to effectively and flexibly manage their workforces upon losing the exemption for frontline executives, administrators, and professionals.”

Also this week, 21 states filed a separate challenge to the rule, arguing that the DOL rulemaking violates the U.S. Constitution and exceeds congressional authority.

While the legal challenges play out, ASAE is urging associations that have concerns about the new overtime rule to contact their members of Congress and ask them to support the Overtime Reform and Enhancement Act (H.R. 5813).

The bill, introduced by Rep. Kurt Schrader (D-OR), would address some of the concerns employers have with the new rule by incrementally phasing in the new salary threshold over the next three years to give businesses adequate time to adjust to the new standard, while also ensuring workers are fairly compensated, ASAE says. The bill would also eliminate the provision in the final overtime rule that allows for automatic updates to the salary threshold every three years.

Chris Vest, CAE

Chris Vest, CAE is director of public policy at ASAE. More »

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