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National Retail Federation and others want overtime rule deemed unlawful
The U.S. Chamber of Commerce and more than 50 other business groups have asked a judge to make a speedy decision in their case to block the federal overtime rule (Plano Chamber of Commerce v. Perez, E.D. Tex., No. 4:16-cv-732).
The business groups argued that the Department of Labor (DOL) exceeded its authority when it more than doubled the salary threshold for exempt employees and when it included an "escalator" provision in the rule that will automatically raise the threshold every three years.
[Update: On Oct. 19, the judge in this case this case was consolidated with a similar lawsuit filed by 21 states.]
For more overtime compliance news, tips and tools, check out the SHRM resources provided below:
They have asked Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas to expedite court proceedings and deem the rule unlawful. They argued that a decision can be made on the administrative record as a matter of law rather than through a trial.
"Simply put, they are saying that the Department of Labor did something it had no authority to do and that it doesn't require a long and protracted lawsuit to decide the matter," said Michael Abcarian, an attorney with Fisher Phillips in Dallas.
"The business-interest plaintiffs made some strong arguments about issues that may not have been at first considered by the Department of Labor," he said. However, "until we see what the government says in response, it's hard to say how the court will decide."
The rule is scheduled to take effect Dec. 1, so there may not be enough time for the court to reach a decision on the matter before employers have to comply.
"While this particular court is well-known for its speedy calendar, employers would be very wise to proceed on the assumption that the new regulations will become effective on Dec. 1," Doran said.
The motion raised some arguments that may "hold some water," said Maria Greco Danaher, an attorney with Ogletree Deakins in Pittsburgh. But she noted that it's already near the end of October, and it will take the DOL some time to respond to a motion of this nature.
"While this particular court is well-known for its speedy calendar, employers would be very wise to proceed on the assumption that the new regulations will become effective on Dec. 1," said John Doran, an attorney with Sherman & Howard in Phoenix.
DOL's Authority Challenged
The overtime rule will raise the exempt salary threshold under the Fair Labor Standards Act (FLSA) from $23,660 to $47,476. The rule also provides for automatic increases every three years based on the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census region.
In their Oct. 14 motion seeking an expedited judgment in the case, the business groups said the changes "fundamentally alter the focus of the exemption analysis."
The rule "would effectively deny the overtime exemption for entire categories of salaried executive, administrative, professional and computer employees whose job duties qualify them to be treated as exempt, and is inconsistent with the statute as well as more than 75 years of congressionally accepted regulation by the department," the motion said.
The business groups argued that the change to the salary threshold and the automatic indexing provision exceeded the DOL's authority under the FLSA. They also argued that the department exceeded its rulemaking authority under the Administrative Procedure Act.
"This isn't a fly-by-night lawsuit that's aimed at getting a little press attention," Abcarian said. He believes it is a solid, well-thought-out lawsuit about the scope of the government's authority, and it may have implications for future challenges.
States Also Sued
Texas and 20 other states also filed a lawsuit
seeking to halt the rule. They asked the same judge to
temporarily stop the rule from going into effect so they will have the time to proceed in court with their claims. On Oct. 19, Judge Mazzant consolidated the two cases at the business groups' unopposed request.
Although their arguments are slightly different, they are essentially asking for the same result, Danaher noted.
For now, she said, employers should keep preparing for the Dec. 1 effective date.
"While certain challenges to the regulations have the potential to succeed, hoping for a 'hail Mary' touchdown before Dec. 1 is ill-advised," Doran said.
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