ABC, NAHB lead suit against Labor Dept. overtime rule

Dive Brief:

  • A coalition of industry groups including the Associated Builders and Contractors and the National Association of Homebuilders, along with various chambers of commerce, have filed suit against the U.S. Department of Labor Wage and Hour Division for its overtime rule.

  • The suit, filed Tuesday in the U.S. District Court for the Eastern District of Texas, claims that the DOL overstepped its statutory reaches by raising the minimum salary for exempted employees. Separately, a lawsuit filed Tuesday against the DOL by 21 states in the same court district makes similar claims.

  • The DOL released its final overtime rule on May 18 and has since been met with resistance from industry groups and local and state governments that say the rule will reduce flexibility in how employers pay their workers, forcing contractors to cut workers’ hours rather than pay them more.

Dive Insight:

Slated to go into effect on Dec. 1, the Department of Labor’s new overtime wage rule has met resistance among employers across many industries, including construction. In a statement following the final rule’s announcement in May, NAHB Chairman Ed Brady said that the DOL was exhibiting "sheer arrogance" in nearly doubling the current overtime salary cap from $23,660 to $47,476. That means employers will be required to pay overtime to workers who are classified as executive, administrative, professional and computer professional earning up to $913 per week, compared to the current $455 weekly maximum for that group to qualify for overtime pay.

Of particular concern is the rule’s indexing provision, which allows the minimum salary requirements to be raised every three years. For an industry in which large projects typically span at least that amount of time, the rule poses challenges around forecasting construction costs, requiring project teams to "speculate" about an employee’s future status years in advance, according to an ABC release.

The rule has the potential to impact more than 4.2 million workers. Brady and other industry leaders caution that its terms will force employers to either raise wages or convert some of those salaried — and in some cases managerial — jobs into hourly positions. Critics of the legislation also contend that it doesn’t consider regional differences in pay.

The construction industry exhibited similar outcry over federal rulings that forced high costs of compliance in the Occupational Safety and Health Administration’s new silica dust rule earlier this year. Intended to protect workers from the negative health impact of silica dust on the job site, the rule cuts the amount of silica workers could be exposed to from 250 micrograms per cubic meter to 50 micrograms per cubic meter and requires companies to document worker exposure and provide medical exams for some exposed workers. However, construction groups say the true cost of implementing the new regulations is nearly $4.5 billion higher than OSHA estimates.

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Filed Under: Legal/Regulation