On Tuesday, the Big “I” joined the U.S. Chamber of Commerce and more than 55 other business groups representing the interests of employers and small businesses across the country in a lawsuit against the U.S. Department of Labor (DOL). The lawsuit claims that the DOL exceeded its statutory authority by issuing a May 2016 rule that requires many employers pay overtime to employees who were not previously legally entitled to overtime.
The DOL rule will have a significant impact on many Big “I” agencies and their business clients. In short, the rule raises the monetary threshold at which employees can qualify to be classified as exempt (overtime pay is not required) under the administrative, executive, professional or computer “white-collar” exemptions by 100%—from $23,660 to $47,476. The rule also raises the threshold for which an employee can be classified as a “highly compensated employee” and not subject to overtime from $100,000 to $134,004.
Starting in 2020, both the $47,476 and $134,004 thresholds will be automatically updated every three years and are estimated to be $51,168 and $147,524 at that time, respectively.
The Big “I” is the only insurance trade association to join the lawsuit. The lawsuit specifically takes aim at the unreasonable 100% increase in the monetary threshold that must be met in order to qualify for one of the “white-collar” exemptions, as well as the automatic updates to the salary threshold every three years.
The lawsuit was filed in federal court in Texas and asks the court to set aside the new rule. The lawsuit also seeks injunctive relief barring the DOL from implementing the rule until the court has finished review of the case.
A second lawsuit challenging the rule was also filed on Tuesday by a coalition of 21 states, including NV, TX, AL, AZ, AR, GA, IN, KS, LA, NE, OH, OK, SC, UT, WI, KY, IA, ME, NM, MS and MI.
The rule is set to take effect on Dec. 1, 2016, barring legal relief. While the Big “I” hopes the lawsuit will prove successful, Big “I” member agencies should still review the rule and assess its potential impacts on agency employees. The Big “I” has set up an overtime rule resource page in order to help members understand the implications of the rule. Members must be logged in to view the page.
Jennifer Webb is Big “I” federal government affairs counsel.