Businesses have been given some reprieve from a change in federal overtime-pay regulations, but many professional organizations have filed a lawsuit in the hopes of maintaining the status quo.
The U.S. House of Representatives recently passed legislation that will provide a six-month delay to the Department of Labor’s expansion of overtime regulations.
Previous overtime regulations stated that workers who made up to $23,660 per year (or $455 a week) were entitled to overtime pay for working more than 40 hours in a week. The new regulations cast a wider net to include anyone earning up to $47,476 a year (or $913 per week.)
To comply with the new regulations, employers will need to either pay their employees overtime for working more than 40 hours per week, raise workers’ salaries above the new threshold, or limit workers’ hours to 40 hours per week.
These regulations met with opposition from business organizations such as the National Retail Federation, which believe the change puts too much of a burden on companies. In addition, the NRF said these regulations would force employers to limit hours or cut base pay in order to make up for the added payroll costs, leaving most workers with no increase in take-home pay despite added administrative costs.
Announced in May 2016, the changes were scheduled to take effect Dec. 1. With the passage of the Regulatory Relief for Small Businesses, Schools, and Nonprofits Act, the deadline has now been pushed to June 1, 2017.
The NRF applauded the House vote. “Lawmakers from both parties recognize that the administration’s radical changes to overtime rules are too much, too fast,” said David French, NRF’s senior vice president for government relations. “Pushing pause on implementing these one-size-fits-all regulations would provide welcome breathing room for retailers large and small struggling to comply with the changes during the holidays, their busiest time of the year.”
The Senate has yet to vote on the bill.
According to a statement from the White House, this new regulation will extend overtime pay protections to more than 4 million workers who have not been eligible before, and it will boost wages for workers by $12 billion over the next 10 years. Before this most recent change, overtime salary threshold modifications have not been updated since 2004, and before that no changes had been made since the 1970s.
But some professional organizations still hope to reverse the change. In September, 56 business groups, including the NRF, filed suit in opposition to the DOL shift. The suit declares that the rule exceeded the authority of the DOL under the Fair Labor Standards Act, a law which establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards for workers.
It further called the overtime legislation arbitrary, capricious and said it would cause economic harm to both employers and employees who are subject to the rule.
Other organizations that added their names to the suit include the Texas Association of Business, the National Association of Manufacturers, the National Federation of Independent Business, Associated Builders and Contractors, the National Association of Homebuilders, and the Texas Retailer Association.