Twenty-one States File Legal Challenge to Obama’s New Final Overtime Rule…Finally

I’ve been telling everyone for the past several months that, so far, there hasn’t been any legal challenges to the US Dept of Labor’s new “Final Rule” on overtime which is slated to go into effect at midnight on December 1, 2016.  However, that’s not the case now.

The overtime rules implemented by the Obama administration are scheduled to take effect Dec. 1. The regulation, which was finalized in May, makes anyone earning up to $47,476 a year, or roughly $913 a week, eligible for overtime pay — a dramatic increase over the $23,660 cutoff now.  But the lawsuit argues the rule is unconstitutional because it dictates wages that states must pay employees for government functions, according to the Review-Journal.

It also argues the change would upset the state budgeting process by requiring states to pay overtime to more employees.

“Longstanding federal law requires an overtime exemption for ‘bona fide executive, administrative or professional’ employees,” Nevada Attorney General Adam Laxalt (R) said in statement to the Review-Journal. He went on to say that the federal government “is forcing state, local and private employers to pay overtime to any employee who earns under a certain amount.”

The Department of Labor says the rule will extend overtime to more than 4 million workers in its first year.

“This long-awaited update will result in a meaningful boost to many workers’ wallets, and will go a long way toward realizing President Obama’s commitment to ensuring every worker is compensated fairly for their hard work,” the agency said, according to the Review-Journal.

Other states that joined in the suit are Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah and Wisconsin.

On the surface of it, the new Final Rule would, in fact, have more employees eligible for overtime compensation.  But what I’ve found over the last several months…dealing directly with clients, law firms, accountancy firms and employers, is that there seems to be a large “negative” effect in the form of “reduced work hours”; reclassification of “salaried exempt”  employees to “non-exempt hourly” regardless of whether or not they were actually and correctly filling the work role of a bonafide “salaried exempt” worker.  And, the most dramatic effect so far has been to simply terminate personnel because employers believe they will not be able to afford paying their lowest “salaried exempt” employee $47,476.00 per year.

Many of us in labor law enforcement, have been perplexed over why US Dept of Labor’s Wage and Hour Division never ever considered “phasing in” this new Final Rule.  Whenever there has been a substantial increase in the minimum wage on a state by state basis, states will typically “phase in” annual increase “incrementally” until the final minimum wage is reached.  So, why US Dept of Labor and Obama administration chose not to do that in this case…is perplexing.

Also see:

US Dept of Labor – Wage and Hour Division Resources for Employers & Employees

US Capitol - Government building Royalty Free Stock ImagesFederal Labor Law Consultants is providing the following hyper link to the US DOL’s Wage and Hour Division website to  provide valuable guidance and resources to both employers and to employees regarding a host of federal labor subjects.   This link will also provide immediate access to all of the US DOL/WHD’s library of FACT SHEETS which “translate” all the “legalese” and are written in easy-to-understand English (also available in Spanish, and other languages) and are listed in alphabetical order by subject matter.

It is highly recommended that employers become familiar with the “common core” of FACT SHEETS offered. For example, Fact Sheet #17A deals with defining and explaining certain Executive Exemptions (salaried exempt) which every business owner should be familiar with.  Fact Sheet #21 deals with Recordkeeping…again which every business owner MUST be familiar with in order to retain and maintain certain minimum records required under the Fair Labor Standards Act as well as the length of time those respective records should retained for. Fact Sheet #22 deals with Overtime issues….how to define it…and how to apply and calculate it correctly.  Fact Sheet #77 deals with the Prohibition of Retailiating against employees for a variety of reasons.  Employers can also find various Fact Sheets on Davis-Bacon and Related Acts (DBRA) for federally-funded construction work projects.

Other Fact Sheets are also available on the McNamara-O’Hara Service Contracts Act (SCA) for Mail Haulers. And, yet other Fact Sheetsare available on Health Care subject for those employers/employees operating or working in hospitals, medical practices, home healthcare, assisted living, nursing homes, and adult foster care facilities.

If you are simply interested in Fact Sheets, then please go to    In the upper right hand corner of the first page, you will see a “search box”.  Type in:  “Fact Sheets”  and you will then be taken to a page where you will see Fact Sheets listed approximately 1/3 down the page.  Click on Fact Sheets..and the same Fact Sheet listing will appear as explained above.

In addition to Fact Sheets, this resource page will also provide invaluable information on “Forms” which employers and employees may access such as:  WH-347, Certified Payroll forms required by federal law and  used by contractor employers on federally-funded Davis Bacon construction project work.  Employers and employees may also find all of the required Family and Medical Leave Act (FMLA) forms used by both employers covered under FMLA and also by employees.