HR Management & Compliance

Some Say the DOL Exceeded Its Authority

Yesterday we looked at how half of the states and some employer interest groups filed a lawsuit against the U.S. Department of Labor (DOL). Today, we present more details of their complaints and what it could mean for employers.

A Chance for Change?

While the plaintiffs probably chose to file their suits in the U.S. District Court for the Eastern District of Texas because it is known as a “rocket docket” where complaints proceed to trial quickly, that’s not indicative of any potential victory, according to William E. Hammel, a partner in Constangy, Brooks, Smith & Prophete LLP’s Dallas office.

The states’ argument that there is no basis for a salary threshold at all has little chance of success, he told®. “The automatic increase [claim] may result in a few interesting appellate issues,” he said, but even a stay of that provision wouldn’t affect the changes coming on December 1. Ultimately, these rules aren’t going away, Hammel said.

The National Federation of Independent Business (NFIB), one of the plaintiffs in the second complaint, also is pursuing other avenues, including a recent request that the DOL delay the rule’s effective date for small businesses. “We’re working with Congress on a bipartisan solution. We are challenging the regulation in court. We are also trying to prevail on the Department of Labor for a more realistic timeframe,” said NFIB President and CEO Juanita Duggan in a statement. “[W]e’re fighting on every front to minimize the damage.”

Lawmakers also have made several attempts to curtail the rule through legislation, but experts say President Obama would veto any bills that make it through Congress.

Employer Takeaway

Hammel said the states are probably right in their predictions: Employers’ payrolls will be substantially affected and implementation of the rule may result in significant layoffs, especially for government employees.

But that doesn’t mean the lawsuits will succeed in delaying or stopping the rules. Employers should not delay compliance, Hammel said. “Expect these rules to go into effect.” There is a cottage industry of plaintiffs’ attorneys that seek out wage and hour claims, he added, “and they have their lawsuits planned out.”

For implementation information and options for controlling overtime costs, see New overtime regulations require $47,476 salary for exemption.

The map below showcases all 21 states that are included in the lawsuit against the DOL.

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