House Postpones Overtime Rule to June 1; Lawsuit Filed by NAHB
The NAHB lawsuit aims to stop the legislation from being enacted while pushing for a gradual increase in the overtime pay limit.
WASHINGTON – Installing security contractors just got a 6-month reprieve regarding new federal overtime laws. Last week, the U.S. House of Representatives voted to push back the start date of the new law from December 1, 2016, to June 1, 2017, that would require overtime be paid to any worker earning less than $47,476 per year.
In the meantime, the National Association of Home Builders (NAHB) and 55 business organizations are making one last-ditch effort to stop the new federal overtime law. The association has filed a lawsuit against the U.S. Department of Labor aimed at stopping the law.
President Obama has reportedly threatened to veto the bill, titled the Regulatory Relief for Small Businesses, Schools and Nonprofits Act, or HR 6094.
The new rules would raise the threshold of eligibility for overtime from $455 per week to $913 per week, or $47,476 annually. As a result, about 4.2 million more workers across the U.S. would become eligible for overtime pay. Any employee earning less than $47,476 per year, or about $23 per hour, must be paid time-and-a-half wages for hours over 40 per week starting on June 1, 2017.
The previous threshold, established in 2004 by the U.S. Department of Labor, was $23,660, or about half the amount of the new minimum.
Among those against the new law are the Consumer Technology Association and the National Retail Federation. CTA CEO Gary Shapiro said the new law could cripple startup innovation. Others not in favor of the rule have warned that such a huge jump in such a short period of time could actually hurt a significant number of the workers the rule was meant to help. Many small business owners would be forced to scale back on pay and benefits, as well as cut workers’ hours.
The NAHB lawsuit filed on September 20 in the U.S. District Court for the Eastern District of Texas asserts that the DOL exceeded its statutory authority in issuing the regulation and violated the Administrative Procedure Act, which governs the way federal agencies can establish regulations. The legal action seeks to bar the DOL from implementing the rule. A coalition of 21 states this week also filed a separate challenge to the rule in the same court district.
Rep. Kurt Schrader (D-Ore.) recently introduced bipartisan legislation to help small businesses and their workers by mitigating the effects of the overtime rule.
The Overtime Reform and Enhancement Act (H.R. 5813) would allow small businesses operating on tight budgets sufficient time to adjust to the overtime rule by gradually raising the $47,476 threshold over a four-year time period.
Moreover, the legislation would eliminate a provision in the rule that requires automatic increases to the overtime salary threshold moving forward.
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