In what seems like an increasingly common scenario, Georgia Attorney General Sam Olens joined a lawsuit on Tuesday challenging the U.S. Department of Labor’s new overtime rule in federal court. In March of 2014, President Obama ordered the Department of Labor to revise the Fair Labor Standard’s Act overtime exemption for executive, administrative and professional employees. Commonly called the “white-collar exemption”, the rule doubles the salary-level threshold for employees to be exempt from overtime, regardless of their job’s duties.
Slated to begin December 1, all employees – including state and local governments – making less than $913 a week, roughly $47K/year, will be entitled to overtime pay. The current threshold is $455/week. The rule additionally will automatically update the salary threshold to make sure it remains at the 40th percentile of full-time salaries in the lowest income region in the country. By 2020, that number is expected to be at $51,000/year.
The Department of Labor (DoL) estimates 4.2 million workers will be affected, including 158,000 in Georgia. In response to criticism, the DoL clarified the options for employers. Employers will be required to either a) pay time-and-a-half for overtime works, b) raise workers’ salaries above the new threshold, c) limit workers’ hours to 40 per week, or d) some combination of those three options.
The changes will apply to all public and private sector industries. According to Labor Secretary Thomas Perez, the percent of salaried workers entitled to overtime pay has fallen from 62% in 1975 to just 7% today. With the new rules, 35% of workers will become automatically eligible. The DoL estimates it could result in an additional $12 billion in pay over the next ten years.
In his statement regarding the lawsuit, Olens cited continuing Executive overreach, “The United States Department of Labor’s new overtime rule is yet another example of the President’s unconstitutional overreach. Our nation’s laws, the separation of powers between the executive and legislative branches must be followed.” According to Olens, the rule will force many state and local governments to substantially increase their employment costs. This could result in some governments being forced to eliminate some services or even lay off employees.
As with many of the lawsuits from a collection of Attorneys General, whether against the EPA or the Healthcare bill, nearly all the members of the group are Republicans. The following states have joined with Georgia – Alabama, Arizona, Arkansas, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, New Mexico, Nevada, Ohio, Oklahoma, South Carolina, Texas, Utah and Wisconsin. Every state that has joined so far has a Republican governor and most have Republican Attorneys General – with the exceptions of Iowa, Kentucky, Maine, Mississippi and New Mexico.
In their challenge, the states make clear how they see the issue and make a connection to Federal encroachment on States’ budgets and choices, “The threat to the States’ budgets and, consequently, the system of federalism, is palpable. By committing an ever-increasing amount of State funds to paying State employee salaries or overtime, the Federal Executive can unilaterally deplete State resources, forcing the States to adopt or acquiesce to federal policies, instead of implementing State policies and priorities. Without a limiting principle (and DOL has recognized none) the Federal Executive could deliberately exhaust State budgets simply through the enforcement of the overtime rule.”
See the full complaint here: http://law.ga.gov/sites/law.ga.gov/files/related_files/press_release/DOL%20OT%20Rule%20Complaint%20-%20Filed.pdf
