On Sept. 20, Wisconsin Attorney General Brad Schimel joined a bipartisan coalition of states in filing a federal complaint against the U.S. Department of Labor’s new overtime rule. The complaint cites federal overreach by DOL and asks the court to prevent implementation of the rule before it is scheduled to take effect on Dec. 1.
The rule, released in late May, would double the salary threshold for “white collar” workers who are exempt from overtime pay from $23,660 to $47,476. According to the rule, the new threshold will automatically increase every three years. DOL estimates the threshold will be $51,168 in 2020. Once implemented, the changes would impact 4.2 million salaried workers.
Business groups say the new rule will force millions of salaried professionals to be reclassified as hourly wage workers. They argue that small businesses, nonprofits, and public sector employers will be especially hurt. The U.S Department of Labor estimates businesses will end up paying workers an additional $1.3 billion a year.
In its fact sheet explaining the rule, DOL provides businesses a “choice” under the new rule:
- Increase their employees’ salaries to the $47,476 threshold.
- Pay workers the time-and-a-half overtime premium for every hour beyond 40 per week.
- Limit workers to a 40-hour work week.
Some groups assert that market considerations over time will prove the paycheck benefits an illusion. To curb costs, some businesses will simply forbid employees from working over 40 hours. They may also have to cut back other expenses such as non-cash benefits or suppress the base pay itself.
Wisconsin joins 20 other states in this complaint, which was filed in Texas on Tuesday, including Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, Texas and Utah.