Plano Chamber of Commerce, Texas Association of Business, U.S. Chamber of Commerce, et al. v. U.S. Department of Labor (Overtime Rule)

Case Updates

Judge Mazzant in the U.S. District Court for the Eastern District of Texas granted the motion brought by the U.S. Chamber and other business groups to invalidate the Obama administration’s overtime rule. U.S. Chamber President and CEO Thomas J. Donohue issued the following statement in response:

“Today’s decision is another victory for the effort to free our economy from the regulatory stranglehold of the last eight years. We have consistently said that the last administration went too far in its 2016 ­overtime rule, and we are pleased that Judge Mazzant granted a final judgment that makes permanent his previous ruling against the overtime rule.

“Today’s decision means small businesses, nonprofits, and other employers throughout the economy can be certain that the 2016 salary threshold will not result in significant new labor costs and cause many disruptions in how work gets done. The Obama administration’s rule would have resulted in salaried professional employees being converted to hourly wages, reduced workplace flexibility and remote electronic access to work, and halted opportunities for career advancement.

“We look forward to working with the Department of Labor on a new rule to develop a more appropriate update to the salary threshold.”

The U.S. Chamber of Commerce led a broad coalition of national and local business groups in a 2016 challenge to the Obama administration’s overtime rule, arguing that Department of Labor (DOL) exceeded its statutory authority in issuing the regulation and violated the Administrative Procedure Act.

The U.S. Chamber of Commerce, leading a broad coalition including the Texas Association of Business, National Automobile Dealers Association, the National Association of Manufacturers, National Association of Wholesaler Distributors, National Federation of Independent Business, National Retail Federation, and more than 50 other national and Texas business groups, filed a legal challenge to the Obama administration’s overtime rule, arguing that Department of Labor (DOL) exceeded its statutory authority in issuing the regulation and violated the Administrative Procedure Act. The DOL’s rule is currently slated to take effect December 1.

“The DOL went too far in the new overtime regulation,” said Randy Johnson, senior vice president of Labor, Immigration, and Employee Benefits for the U.S. Chamber. “We have heard from our members, small businesses, nonprofits, and other employers that the salary threshold is going to result in significant new labor costs and cause many disruptions in how work gets done. Furthermore, the automatic escalator provision means that employers will have to go through their reclassification analysis every three years. In combination, the new overtime rule will result in salaried professional employees being converted to hourly wages, and it will reduce workplace flexibility, remote electronic access to work, and opportunities for career advancement."

The suit charges that, by setting an excessively high salary threshold for determining who qualifies as “executive, administrative and professional employees,” the rule departs from the intent established by Congress in the Fair Labor Standards Act and consistently administered by DOL for more than 75 years. Furthermore, DOL ignored regional and industry differences that have previously been acknowledged, resulting in a “one size fits none” salary threshold. The suit also argues that the provision to automatically update the salary threshold every three years without a rulemaking or taking input from affected parties is not authorized by the Fair Labor Standards Act or any other relevant statute.

In addition to the private groups’ suit, a coalition of 21 states filed a challenge at the same time reinforcing the range of entities who will have severe problems complying with this regulation. “The Chamber is grateful to be joined by a coalition of states and state attorneys general who are committed to improving economic growth and career opportunity, and to defending the rule of law,” said Johnson.