Associated Builders and Contractors (ABC) and a coalition of business groups filed suit against the U.S. Department of Labor (DOL) Wage and Hour Division’s final overtime rule. The legal challenge was filed in the U.S. District Court for the Eastern District of Texas.
“The Department of Labor overstepped its statutory authority by dramatically increasing the minimum salary for exempt employees and by automatically updating the salary threshold,” says ABC Vice President of Legislative and Political Affairs Kristen Swearingen. “The unprecedented automatic indexing provision circumvents the intent of Congress under the Fair Labor Standards Act and is particularly problematic for construction business owners who often need to project costs and workforce needs over multiple years for projects managed by exempt employees.
“These projects often last longer than three years and are meticulously planned in order to stay on time and budget,” says Swearingen. “This rule will create uncertainty for contractors and their employees by forcing contractors to speculate about employees’ status years into the future when work on a project will actually be performed.”
DOL released its final overtime rule on May 18. The final rule states that employees who earn $47,476 per year are eligible as hourly employees rather than salary and will be paid overtime compensation for hours worked over the 40-hour limit. This new rule will also update the salary threshold every three years based on wage growth over time. It will become effective Dec. 1, 2016.
ABC says the rule will impose overtime payment requirements on employers of more than 4.2 million employees who are classified as executive, administrative, professional and computer professional employees and have historically been considered to be exempt from overtime.
ABC has been a vocal opponent of the overtime rule and submitted comments along with more than 900 ABC members opposing the rule. ABC supported legislation that would prevent DOL from implementing the rule and submitted comments as a member of the Partnership to Protect Workplace Opportunity as well.