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Associated Builders and Contractors announced the filing of a complaint in the U.S. District Court for the Eastern District of Texas, Sherman Division, challenging the U.S. Department of Labor’s controversial final rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees, which will change overtime regulations under the Fair Labor Standards Act.
The Department of Labor (DOL’s) new final rule increases the minimum annual salary level threshold for exemption in two phases: from the current level of $35,568 to $43,888 on July 1, 2024, and to $58,656 on Jan. 1, 2025. In addition, salary thresholds will update every three years starting on July 1, 2027.
“Regrettably, here we go again,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “In 2017, this court permanently enjoined the DOL’s 2016 overtime rule. We are once again back before the court because the DOL, in direct defiance of this court’s previous ruling, decided to move forward with a new overtime rule that increases the minimum salary level threshold for exemption far beyond a level which the DOL is permitted to adopt. In addition, it includes an unlawful automatic indexing provision that will further increase the salary threshold without the notice-and-comment rulemaking required by the Administrative Procedure Act.
“Virtually all of ABC’s members employ workers who qualify for exempt status, and like the unlawful 2016 overtime rule, the DOL’s 2024 rule will reclassify a massive amount of ABC member employees who currently qualify for exempt status as nonexempt,” said Brubeck. “This will disrupt the entire construction industry, specifically harming small businesses, as the rule will greatly restrict employee workplace flexibility in setting schedules and hours, hurting career advancement opportunities.
“In addition, the 2024 rule’s radical increase in the salary threshold for exemption will further complicate the current economic outlook,” says Brubeck. “Multiple industries, like construction, are grappling with uncertain economic conditions such as inflation, supply chain disruptions, high materials prices and workforce shortages, all of which push operational costs ever higher. Specifically, ABC estimates that the construction industry must hire more than half a million additional workers in 2024 to meet demand. The rule’s triennial automatic indexing provision will exacerbate the harmful impact on businesses and will add to rampant inflation that is already harming the economy as a whole.”
On Nov. 7, 2023, ABC called on the DOL to withdraw the proposed rulemaking. ABC also signed onto coalition comments criticizing the overtime proposed rule, joining 244 national, state and local organizations representing employers from a wide range of private industries and public, nonprofit and education sectors.
In 2016, the Obama administration issued a final overtime rule that would have doubled the minimum salary level for exemption from $23,660 to $47,476 per year. ABC, along with several other business groups, sued the DOL in federal court and succeeded in blocking the rule from taking effect.