The Department of Labor’s (DOL) new overtime rules that more than doubles the salary threshold to determine who is eligible for overtime pay is being challenged in federal court by 21 states. The new regulations are scheduled to take effect nationwide in December 1, 2016.
According to the Wall Street Journal, the Attorneys General in Texas and Nevada filed a lawsuit on September 20, 2016 on behalf of their states and 19 others, alleging that the new DOL standards violate the U.S. Constitution and exceed Congressional authority.
Proponents of the new salary threshold, which was strongly promoted by President Obama, say it will provide important protection for millions of workers by making them eligible for overtime pay if they earn less than $47,476 per year. The previous threshold, $23,660 per year, was set in 2004 and has not been modified since. The new regulations will automatically adjust the threshold every three years by indexing it to salary growth in the lowest income region of the country.
Opponents say the DOL’s sweeping new overtime regulations will dramatically increase payroll costs for thousands of private businesses, as well as state and local governments, and may result in many layoffs or reduced working hours.
It is not yet known whether the challenge to the DOL’s overtime regulations will have an effect on the December start date.
For more information on the new DOL overtime threshold regulations and how they may affect your payroll costs, please contact Gray, Gray & Gray at (781) 407-0300.