Court Rejects DOL Overtime Rule

In a major victory for Big “I” members, U.S. Federal District Court Judge Amos L. Mazzant issued a ruling striking down an Obama Administration regulation on overtime pay. The overly complex rule would have required employers to pay overtime to many employees who were not previously legally entitled to it.

The Big “I” strongly opposed the rule throughout the regulatory process and, last year, joined the U.S. Chamber of Commerce, more than 55 other business groups and 21 state governments in lawsuits against the Department of Labor (DOL). The Big “I” was the only insurance trade association to join this effort.

The overtime rule was originally set to take effect in December 2016, but implementation was delayed pursuant to a previous court order. On Aug. 31, the court ruled on a motion for summary judgment in favor of the Big “I” and the association’s co-litigants. The ruling, which applies nationwide, means that the court found no reason to go to trial because the federal government overreached in crafting the regulation.

Earlier this week, the Trump Administration announced it will not appeal the decision—which means the 2016 federal overtime rule will not take effect. However, independent insurance agencies and brokerages must continue to comply with all current state and federal overtime laws and regulations, and changes to current overtime regulations are still possible.

In July, the DOL released a request for information to aid it in formulating a new proposal to amend overtime pay regulations. The Fair Labor Standards Act requires the DOL to periodically review overtime pay regulations. But in order for the DOL to finalize any new rule, the Administration must follow the Administrative Procedure Act, which is generally a multiyear process.

The Big “I” prepared a one-page document outlining the impact of the ruling on members. The association will continue to work with the Administration regarding potential changes to the overtime rule, and will submit comments for the DOL’s request for information later this month.

Jennifer Webb is Big “I” federal government affairs counsel.