by: Joe Lanan / Community Impact Newspaper
Round Rock Chamber and Cedar Park Chamber of Commerce joined more than 50 Texas business organizations in taking legal action, announced Tuesday, against a new Department of Labor overtime rule, which goes into effect Dec. 1.
More than 50 Texas and national business organizations, led by the U.S. Chamber of Commerce, National Association of Manufacturers and the Texas Association of Business, filed a lawsuit in U.S. District Court that alleges a new overtime rule will negatively impact businesses. The legal challenge alleges the federal government “went too far in the new overtime regulation.”
“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,” said Randy Johnson, U.S. Chamber vice president of labor, immigration and employee benefits, in a statement. “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 overtime pay rule changes the salary threshold for those who are exempt from receiving mandatory overtime pay. Currently, full-time, salaried workers making $23,660 or more per year do not qualify for overtime pay. Under the rule, that salary level changes to $47,476 or more per year in 2016.
Tony Moline, president and CEO of the Cedar Park Chamber of Commerce, said the Cedar Park Chamber Board voted to actively oppose the new law in April.
“It more than doubles the salary threshold for exempt employees overnight, and it will not only have a negative impact on business, but it will have a negative impact on the morale of the employees it will affect,” Moline said.
Moline said both large and small business members of the Cedar Park chamber have said the law will affect wages, employee hours and raise the overall cost of doing business. He also said having to “punch the clock” could feel like a demotion to many employees.
“This stops business flexibility and could potentially hurt employee morale,” he said.
For now, Moline said the chamber’s goal is to educate its members about the law and encourage them to start tracking hours immediately so they are not caught off-guard when the law goes into effect.
“Around 70 percent of all businesses [in the country] are currently out of compliance and will be impacted by these new regulations. They need to start planning now,” he said.
Mike Odom, Round Rock Chamber president/CEO, also said the new rule will have a “clear and significant negative impact” on local businesses.
“After reviewing the ruling, our Business Climate Council concluded that it is a significant overreach and a punishing unfunded mandate by a governmental body,” Odom said in a statement. “It will have immediate and long-term ramifications on our business climate not only because of the doubling of the salary threshold, but because of the automatic updates to the salary threshold that will occur every three years. With an effective date of December 1 of this year, it is imperative that businesses get educated on the changes now.”
The DOL estimates about 4.6 million employees who are currently exempt from overtime pay would receive overtime protection under the rule, which the department argues would help those workers receive fair compensation for their work.
The suit states 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. The lawsuit was filed in the U.S. District Court for the Eastern District of Texas.
The state of Texas on Tuesday also announced its own federal lawsuit against the pending overtime rule change, joining a coalition of 21 states. Attorney General Ken Paxton said in a statement the new law would “lead to disastrous consequences for our economy.”
U.S. Secretary of Labor Thomas Perez said in a statement Tuesday he expects the overtime rule to withstand legal scrutiny, dismissing the lawsuits as a partisan attempt to undermine the Obama administration’s labor policies.
“Despite the sound legal and policy footing on which the rule is constructed, the same interests that have stood in the way of middle-class Americans getting paid when they work extra are continuing their obstructionist tactics,” Perez said in the statement.
The overtime rule was intended to “restore the intent” of the Fair Labor Standards Act, Perez said. The effects of the law’s overtime protections have eroded over time, he said.
Community Impact Newspaper earlier this month reported that McKinney Chamber of Commerce would be among the Texas-based groups supporting the lawsuit.
Greater Austin Chamber of Commerce was not listed among the parties participating in the lawsuit.