Two lawsuits have been filed against the Department of Labor’s (DOL’s) Overtime Exemption Rule, alleging that the rule is unconstitutional. The first lawsuit has been filed by 21 states, claiming that their state budgets and school boards cannot absorb the new rule’s higher minimum weekly salary threshold ($913). The lawsuit also questions the validity of the automatic escalator that will increase the minimum weekly salary threshold every three years without any notice or opportunity for input by the businesses community.
The other lawsuit was filed by numerous business trade associations—including the U.S. Chamber of Commerce and other NCA allies—alleging the same concerns as those brought forward by the 21 states. In short, the two lawsuits express the deep concerns nearly half of the states of the union and most employers have with the DOL’s rule.
NCA supports these lawsuits’ claims, as they are representative of our concerns for the club industry. However, it is likely that both courts will rule in favor of the DOL. While the DOL has the right to increase the minimum weekly salary threshold, there is still plenty to gain from these lawsuits.
What a Court Win Would Look Like
As you know, the threshold to be exempt from overtime pay will increase from $455/week to $913/week, more than doubling the current rate. This would cause a severe negative impact on clubs and other employers, especially small businesses. In either of these cases, the judge could stop the rule from going forward and require DOL to provide a better economic impact analysis.
The next possibility is that the judge could strike down the automatic escalator provision from the overtime rule, which is a more likely scenario. The escalator disregards federal law that says stakeholders must be given a chance to comment on any changes to the minimum weekly salary threshold number. Since this rule removes that possibility, NCA believes the court should strike down that part of the overtime rule.
NCA will keep you informed regarding the progress of the cases.
Other Efforts
NCA is also targeting the overtime rule on Capitol Hill. Rep. Kurt Schrader’s (D-Ore.) has proposed the Overtime Reform and Enhancement Act (H.R. 5813), a bill to phase-in the rule’s new minimum weekly salary threshold, thus relieving pressure on clubs. NCA and our coalition allies remain active in drumming up support for the bill, which has received backing from several Republicans in Congress. However, more support is needed in order for this bill to be put up for a vote or to be included in the final spending bill. For now, there does not seem to be strong enough support on the Hill for either of those options to take place
Finally, there is a new bill recently filed by Rep. Tim Walberg (R-Mich.), the Regulatory Relief for Small Businesses, Schools and Nonprofits Act (H.R. 6094). This legislation would delay the start of the rule for six months. Regrettably, there is little likelihood it will reach the president’s desk. If it does, it will face a veto from President Obama.
Your Go-to Resource for Overtime Guidance
Last week, NCA has launched our new Overtime Resource Center. This web page compiles key information to help clubs navigate the new and complex overtime rule. The Overtime Resource Center provides key information in the following areas:
- Comprehensive FAQs. Over the past year NCA members have asked numerous overtime questions. The Overtime Resource Center answers these and other critical questions to help clubs navigate the rule in five areas: Basics; Exemptions; Commissions, Bonuses & Other Earnings/Benefits; Hours Worked; and Staffing.
- In-depth educational resources. Articles and webinars by NCA’s Vice President of Government Relations & General Counsel Brad Steele provide you with key information from our overtime expert.
- Overtime calculator. Provided by BLR, a U.S. legal compliance consultant, this calculator provides a step-by-step process to accurately assess your staff’s overtime pay under the new rule.
- Advocacy timeline. Follow NCA’s actions since the overtime rule was announced and learn up to the minute news from supporters on Capitol Hill.
- Overtime News Feed. Read the latest news on the overtime rule and how it impacts employers nationwide.
Stay Involved
For now, the DOL’s overtime rule will go into effect on December 1, and clubs should continue to prepare for its implementation. Stay up to date on our latest advocacy efforts by following NCA on Twitter @NatlClubAssn to see Brad Steele’s live updates from Capitol Hill.
If you have any questions or would like further information on the new overtime rule any other issues affecting the club industry, please email Brad at [email protected] or call (202) 822-9822.