Earlier this year, the Department of Labor issued the rule, which will double the current overtime salary limit of $23,660 to $47,476. It also allows the minimum salary requirements to be raised every three years.
National Association of Home Builders and many groups not in favor of the rule have warned that such a huge jump in such a short period of time could actually hurt a significant number of the workers the rule was meant to help. Many small business owners would be forced to scale back on pay and benefits, as well as cut workers’ hours.
The lawsuit filed on Sept. 20 in the U.S. District Court for the Eastern District of Texas asserts that the Department of Labor exceeded its statutory authority in issuing the regulation and violated the Administrative Procedure Act, which governs the way federal agencies can establish regulations. The legal action seeks to bar the Department of Labor from implementing the rule. A coalition of 21 states this week also filed a separate challenge to the rule in the same court district.
National Association of Home Builders has also been leading the charge to seek a legislative solution and worked closely with Rep. Kurt Schrader (D-Ore.), who recently introduced bipartisan legislation to help small businesses and their workers by mitigating the effects of the overtime rule.
The Overtime Reform and Enhancement Act (H.R. 5813) would allow small businesses operating on tight budgets sufficient time to adjust to the overtime rule by gradually raising the $47,476 threshold under the following timetable.
- Dec. 1, 2016 – $35,984
- Dec. 1, 2017 – $39,814
- Dec. 1, 2018 – $43,645
- Dec. 1, 2019 – $47,476
Moreover, the legislation would eliminate a provision in the rule that requires automatic increases to the overtime salary threshold moving forward. National Association of Home Builders is strongly urging Congress to swiftly pass this legislation.