Please note: On November 22, 2016, a major change regarding the overtime rule discussed in this article occurred. Please see Agency Checklists’ November 27 article: Federal Judge Stops New $47,476 Minimum Salary Law for Overtime Taking Effect.
The new overtime rule is currently slated to go into effect on December 1st
A coalition of various organizations and trade associations, have filed suit against the Department of Labor, alleging that its recently promulgated rule regarding overtime is too burdensome on small businesses. Joining the fight is the Independent Insurance Agents & Brokers of America (the IIABA or Big “I”), which, along with the U.S. Chamber of Commerce and 12 other national trade associations, has filed suit on behalf of thousands of independent insurance agencies the Big I claim will be adversely affected by this new rule.
“This misguided overtime rule will negatively impact independent insurance agencies and their employees,” says Bob Rusbuldt Big “I” president and CEO. “The Big ‘I’ believes the lawsuit highlights the burdens this regulation places on many businesses across the country, and the harm it will do to many employees who will lose the flexibility and benefits traditionally associated with exempt employment positions. This rule is a jobs killer and it needs to be fixed.”
According to the Big “I”, in addition to its own lawsuit, a coalition of 21 different states also has filed a separate legal challenge to the new rule. Massachusetts did not participate in the suit.
What does the new overtime rule actually require?
As reported in Agency Checklists, May 25, 2016 article entitled “New Law Sets $47,476 As Minimum Salary for Overtime,” the new rule, effective December 1, 2016, raises the minimum level full-time salaried white collar workers must earn before an employer can claim a legal exemption from paying overtime.
It also provides that a white collar worker must earn $913 per week, or $47,476 annually, before an employer can claim a legal exemption from paying overtime. Presently, if a white collar worker earns less than $455 per week they must be paid overtime regardless of the white collar exemption (as explained further below).
“The lawsuit takes aim at the arbitrary and excessive 100% increase in the monetary threshold required to be exempt from overtime, as well as the mechanism for automatically updating the threshold,” says Charles Symington, Big “I” senior vice president of external and government affairs. “The Big ‘I’ is the only insurance trade association to join the lawsuit. We believe this lawsuit is a necessary step to help protect our members, many of which are small businesses, against unreasonable regulatory overreach by the Department of Labor.”
The Big “I” lawsuit, filed in the U.S. District Court for the Northern District of Texas, is asking that court to set aside the new rule. It is also seeking injunctive relief to bar the DOL from implementing the rule until the court has finished reviewing the case.