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As the Obama administration continues a regulatory onslaught in its final months, the U.S. Chamber of Commerce is taking the fight over its most burdensome and unprecedented new rules to the courts. Most recently, we filed a challenge to the Department of Labor’s (DOL’s) new overtime rule, which would raise costs for businesses, further stall economic growth, and reverse career and promotion opportunities for workers.
The rule will double—to $47,476—the salary threshold under which workers are virtually guaranteed time-and-a-half pay when working over 40 hours a week. This dramatic increase exceeds DOL’s legal authority, which is why we’ve led a broad coalition of business groups in going to court over the rule.
We’re challenging it on the grounds that the excessive salary threshold increase contradicts Congress’ intent for executive, administrative, and professional employees to remain exempt from overtime pay. Moreover, the rule includes an unauthorized provision that will cause the salary exemption to rise automatically every three years without going through the standard rulemaking process or comment phase.
At the Chamber, suing is always the last resort. In fact, the Chamber and its federation of state and local partners made good faith recommendations to DOL before the rule was proposed. Our advice was ignored.
The rule’s legal shortcomings are far from its only problems. It will also cost businesses a staggering $1.2 billion every year and cause major compliance headaches. By raising costs for businesses, this rule will be an added drag on economic growth. And a good rule of thumb is that if it’s bad for economic growth, it’s bad for everybody.
How will it hurt workers? If employers can’t afford to increase salaries to maintain the exempt status of their employees, they’ll be forced to reclassify workers from salaried to hourly wages, which is the opposite of how careers normally progress. While these workers will still be performing exempt duties, they’ll now be on the clock—likely meaning they will no longer be able to work remotely or travel for their jobs.
Although the Chamber has acknowledged that the salary threshold should be updated, DOL’s overtime rule will hurt the very people the department claims it’s trying to help. If you want to lift incomes, you must grow the economy—not hold it back by further hamstringing job creators.
From the disastrous implications for businesses and workers to the circumvention of Congress and written law, this rule is bad news any way you look at it. The Chamber sees no choice but to challenge it in court.