Twenty-one states have filed suit against the federal government seeking a preliminary and permanent injunction to block the Department of Labor’s new overtime rule and declare it unlawful.
In the 30-page complaint filed Sept. 20, 2016, the states allege that the Obama administration is trying to impose heavy costs and its own policy initiatives, in violation of the 10th Amendment to the Constitution. On March 13, 2014, President Barack Obama ordered the DOL to revise the Fair Labor Standards Act’s overtime exemption to account for the federal minimum wage. The DOL complied and released its final rule on May 18, 2016.
The rule, which we summarized in a previous post here, more than doubles the salary-level threshold for employees to be exempt from overtime. Consequently, after Dec. 1, 2016, all employees are entitled to overtime if they earn less than the new threshold of $913 a week — including state and local government employees. This change would require states to increase salaries for tens of thousands of employees, or reclassify those employees as hourly, likely cutting back on their time and reducing the services available to the public.
The states argue in their lawsuit that the final rule not only threatens their budgets, but it represents an encroachment upon the rights of states and inappropriate federal overreach in violation of the 10th Amendment. They further allege the salary level change does not take into consideration what duties employees are actually performing and is something that ultimately should have been decided at the state and local level. Neither Missouri nor Illinois were among the 21 states to file suit.