Yesterday, officials from 21 states filed suit in the Eastern District of Texas challenging the constitutionality of the Department of Labor’s overtime exemption rule changes. These changes were announced in May of this year and will raise the minimum salary level for the executive, administrative and professional employee exemptions to $47,476 per year, more than double the current minimum salary. This new threshold becomes effective on December 1, 2016.
In the lawsuit filed yesterday, the 21 states specifically allege that the new rule changes violate the Tenth Amendment by mandating how state employees are paid. These states also challenge the new rule’s mechanism by which the threshold salary would increase every three years, alleging that this would deplete state resources in violation of the Constitution.
In addition to these legal arguments, this group of 21 states has pragmatic concerns about the upcoming rule changes as well. Specifically, many state and local governments are concerned that these new rule changes will place a heavy burden on their budgets by increasing employment costs, thereby forcing them to eliminate services or lay off employees.
Although this lawsuit is an important development, employers are well-advised to continue examining the classification of members of their workforce in accordance with the changes announced by the FLSA in May. Employers should continue working on plans to ensure compliance by December 1, 2016.