'Disastrous Consequences': 21 States Sue U.S. Over New Overtime Rule

A group of 21 states is suing the U.S. over the new overtime rule set to take effect Dec. 1. The attorneys general of Texas and Nevada, who filed the lawsuit on behalf of their states and 19 others, alleged that the rule is unconstitutional and will place too great a burden on businesses, nonprofits and other employers.

The rule, passed in May, doubled the salary threshold for overtime eligibility from $23,660 to $47,476 and is expected to affect 4.2 million Americans not previously eligible for overtime pay. It will also update the salary threshold every three years.

The Wall Street Journal had more on the lawsuit:

Among other things, the lawsuit filed by the states alleges the mechanism in the rule that automatically will increase the overtime threshold every three years was finalized without going through a rule-making process that plaintiffs contend is required by law. The plaintiffs say that means stakeholders won’t have the chance to provide their input before the massive changes take effect.

“Once again, President Obama is trying to unilaterally rewrite the law,” Texas Attorney General Ken Paxton said in a statement. “And this time, it may lead to disastrous consequences for our economy.”

Labor Secretary Thomas Perez defended the regulation Tuesday and called the lawsuits partisan “obstructionist tactics” that will prevent the Obama administration from ensuring Americans are fairly paid when they work extra hours.

Critics and opponents of the new overtime rule say it will hurt businesses, forcing employers to cut jobs, reduce hours and slow hiring. And there have been many opponents. A coalition of 50 businesses, led by the U.S. Chamber of Commerce, filed a separate lawsuit seeking to overturn the rule.

The nonprofit sector has been a bit more divided. Some organizations have vehemently opposed the new rule, with state-funded nonprofits, in particular, predicting dire consequences for their operations and the sector as a whole. Many others within the sector support the rule, even as they acknowledge the challenges it creates.

"What we seriously need to discuss is the philosophical and cultural shift that we, as a sector, need to make in light of these new laws," Vu Le, executive director of Rainer Valley Corps, wrote on his popular blog, Nonprofit With Balls. "Despite the challenges we will encounter, the new Fair Labor Standards Act overtime law is good for the nonprofit sector and thus for our community. It will force us to address some entrenched, destructive philosophies and practices plaguing our sector. I am hoping that the new law will make us realize that it is not OK or normal to underpay people."

In addition to Texas and Nevada, the 19 other states involved in the lawsuit are Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, New Mexico, Ohio, Oklahoma, South Carolina, Utah and Wisconsin. According to The Wall Street Journal, all but one—Louisiana—have a Republican governor.