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Sept. 15 — The U.S. Chamber of Commerce and other trade associations will soon file a lawsuit in Texas challenging the Labor Department’s regulation to expand overtime pay eligibility, according to a recent media report.
After strong speculation that the Chamber would sue to stop the controversial regulation, the McKinney Chamber of Commerce in McKinney, Texas, announced that it has joined a coalition in support of the U.S. Chamber’s lawsuit, the report said.
The groups are expected to file the lawsuit in federal court as soon as next week so that they can get a judge to consider an injunction blocking the rule before it takes effect Dec. 1.
The rule would make some 4 million workers newly eligible for time-and-a-half pay for all hours worked after 40 each week. It would do that by more than doubling the salary threshold—up to about $47,500—under which workers are automatically entitled to overtime pay.
The lawsuit will likely allege that the entire rule is arbitrary and capricious, in violation of the Administrative Procedure Act. Critics have said the threshold increase is too much too fast, doesn’t adequately account for regional cost-of-living differences and will have a particularly negative impact on small businesses, academic institutions and other nonprofit employers.
The Chamber and others are also expected to take aim at a provision that adjusts the salary threshold for inflation every three years. Opponents have said the Labor Department exceeded its authority to update overtime exemption standards “from time to time” by providing for regular, automatic eligibility updates.
The groups are additionally likely to argue that the DOL should at least have to go through the notice-and-comment rulemaking process every time it wants to update the salary threshold.
Texas is a particularly attractive venue for the overtime challengers, because federal judges in the state have recently been willing to pump the brakes on other Obama administration initiatives.
A federal judge in the Northern District of Texas in June enjoined the DOL from implementing its “persuader” rule, which expands disclosure requirements for employers that use advisers to help fight unionization drives. A separate move to expand deportation protections for some undocumented workers also remains on hold, thanks to an injunction in the Southern District of Texas.
The National Federation of Independent Business, the Texas Association of Business and the National Association of Manufacturers also signed on to the lawsuit. The trade associations are being represented by Littler Mendelson PC, according to the report.
The McKinney Chamber’s announcement does not appear on the Chamber local’s website.
Attempts to reach McKinney Chamber board members were unsuccessful.
McKinney Chamber President Lisa Hermes told Bloomberg BNA via e-mail Sept. 15 that she was still gathering information and wasn’t immediately available to speak.
Marc Freedman, executive director of labor law policy at the U.S. Chamber, and Tammy McCutchen, a principal at Littler Mendelson, declined to comment.
An article on the McKinney Chamber’s news release appeared in the local Texas news service, Community Impact, Sept. 8 and remained there through Sept. 14.
Following Bloomberg BNA calls to the McKinney Chamber Sept. 14, the article was no longer posted on the Community Impact website the next day. Then, late Sept. 15, the news service ran a different version of the article, which no longer identified Texas as the jurisdiction and said the McKinney Chamber is not part of any lawsuit, but does support the litigation.
The Labor Department was already expecting the challenges. “We are confident in the legality of all aspects of the rule,” DOL spokesman Jason Surbey told Bloomberg BNA prior to the McKinney announcement.
To contact the editor responsible for this story: Susan J. McGolrick at email@example.com
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