Employer Lawsuit Aims to Block New DOL Overtime Pay Rule

More than a dozen trade groups, including the National Association of Home Builders, the International Franchise Association, and the National Federation of Independent Business have sued the U.S. Department of Labor in an effort to block a Department of Labor final overtime pay rule that raises the minimum salary level for employee exemption. The lawsuit was filed in federal court in the Eastern District of Texas.

An article by attorney Eric B. Meyer, from the legal group Pierson Ferdinand, calls this a case of “déjà vu all over again.” He notes that a similar, and successful, lawsuit was filed in the same court, in 2017. A federal judge blocked that rule in part because he believed Congress defined the exception in terms of duties, specifically characterized as “executive, administrative, or professional (EAP),” rather than salary level. 

“Put simply,” Meyer writes, “the DOL should have focused less on wages and more on duties to determine who is overtime-eligible.”

The current rule is scheduled to become effective on July 1, with an update scheduled for January 1, 2025, and future updates mandated every three years. The plaintiffs claim that the new rule would result in irreparable harm, especially to smaller employers and non-profits, and would result in employers generally, in the words of the complaint, losing the ability “to effectively and flexibly manage their workforce … for front line executives, administrators, and professionals.”

It is possible the court will rule before the July 1 effective date, but Meyer warns that despite the favorable history of this issue for employers, they should at this point “consider planning as if the new rule will take effect as scheduled. Determine which employees the rule may impact and prepare to adjust accordingly.”