21 states sue Department of Labor on overtime rule

Last week, 21 states sued the U.S. Department of Labor over the impending rule that would require employers to pay overtime to any salaried worker making less than $47,476 a year.

Republican Nevada Attorney General Adam Laxalt filed the suit in the U.S. District Court in Eastern Texas, urging the court to block the implementation. Other plaintiffs include Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah and Wisconsin.

The rule is currently set to take effect on Dec. 1, 2016 and would make 4 million higher-earning workers eligible for overtime pay. The threshold would also readjust every three years to reflect changes in average wages. Currently, salaried employees making less than $23,600 a year are eligible.

“This long-awaited update will result in a meaningful boost to many workers’ wallets, and will go a long way toward realizing President Obama’s commitment to ensuring every worker is compensated fairly for their hard work,” the Labor Department said in May when it announced the new rule.

We will continue to update readers on the overtime rule and new developments emerge, but I would strongly urge small business owners to continue with any plans they have to deal with the impending effects of the rule. Some legal experts have stated the legal challenges stand little chance in court.

“I’m certainly not surprised to see the lawsuits, but I think (both suits) have a steep uphill climb to succeed,” Gary Klotz, partner and labor and employment attorney for Butzel Long PC in Detroit, said to Crain’s Detroit Business. “Both suits are challenging the authority for the Department of Labor to do something they’ve done in the past. If they did it then, they can do it now.”

Businesses will have 60 days from the rule’s publication to be in compliance, so it’s better to have a plan in place, ready to go, and have the rule thrown out than it is to be scrambling on Dec. 1.

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