Update: Proposed Changes to FLSA Overtime Rule Dismissed
21 States File Motion to Block New FLSA Overtime Rule
Twenty-one states that oppose the updates to the Department of Labor’s (DOL’s) FLSA overtime rule have filed an emergency motion asking a federal judge to put a stop to the regulation before its December 1 effective date. Led by Nevada and Texas, the states filed the motion on October 12 stating that the DOL has focused the new rule too much on a worker’s salary instead of duties performed and does not take into account adjusting the salary threshold every three years for inflation.
The States’ Challenges
Let’s take a closer look at what the states are challenging in the FLSA overtime rule:
Salary Threshold Adjustments
The motion argues that the DOL stated in 2004 that it did not have statutory authority to impose automatic indexing, which is the last time they updated FLSA regulations. Now they are wanting to impose salary threshold adjustments every three years, which is the complete opposite stance.
The states’ motion also claims the DOL’s new overtime rule completely rejects the salary test, which has been used for decades. The salary test has never been challenged before because the threshold has always been so low. But with such a dramatic increase to the salary threshold, the motion is challenging the use of the salary test with the new rule.
According to the Society for Human Resource Management (SHRM), “the FLSA requires an overtime exemption for employees working in an executive, administrative, or professional capacity with no reference to a minimum salary. But the DOL’s new rule disallows any overtime exemption for such employees, unless they make more than $47,476 a year.”
Furthermore, the motion argues that the DOL has underestimated the impact the new overtime rule with have on states financially. According the SHRM, predictions estimated a first year cost to state and local governments at $115.1 million, with an additional $85.4 million after each automatic update. The states’ motion claims the financial impact will be much more severe than what the DOL has predicted.
Regardless of whether this injunction is granted or not, employers are urged to continue preparing for the new overtime rule taking effect December 1. It is better to implement new pay structures well before the effective date.
How APS Can Help
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