The Frisco Chamber of Commerce joined more than 50 Texas business organizations in filing a lawsuit against a new Department of Labor overtime rule, which goes into effect Dec. 1.
The Texas and national business organizations, led by the U.S. Chamber of Commerce, National Association of Manufacturers and the Texas Association of Business, filed a lawsuit that alleges a new overtime rule exceeds the Department of Labor's statutory authority under the Fair Labor Standards Act.
"We feel this is going to be a huge burden to individual businesses, especially when many of the businesses don't fully understand how it's going to impact them and the costs associated with that," said Tony Felker, Frisco Chamber of Commerce president.
Randy Johnson, U.S. Chamber vice president of labor, immigration and employee benefits, said in a statement that the policy would result in significant new labor costs and cause “disruptions” in the labor market.
“The new overtime rule will result in salaried professional employees being converted to hourly wages, and it will reduce workplace flexibility, remote electronic access to work, and opportunities for career advancement,” Johnson said.
U.S. Secretary of Labor Thomas Perez said in a statement Tuesday he expects the overtime rule to withstand legal scrutiny, dismissing the lawsuits as a partisan attempt to undermine the Obama administration's labor policies.
"Despite the sound legal and policy footing on which the rule is constructed, the same interests that have stood in the way of middle-class Americans getting paid when they work extra are continuing their obstructionist tactics," Perez said in the statement.
The overtime rule was intended to "restore the intent" of the Fair Labor Standards Act, Perez said. The effects of the law's overtime protections have eroded over time, he said.
The overtime pay rule changes the salary threshold for those who are exempt from receiving mandatory overtime pay. Currently, full-time, salaried workers making $23,660 or more per year do not qualify for overtime pay. Under the rule, that salary level changes to $47,476 or more per year in 2016.
The DOL said about 4.6 million employees who are currently exempt from overtime pay would receive overtime protection under the rule, which the department argues would help those workers receive fair compensation for their work.
In a previous article, the Frisco Chamber of Commerce estimated that more than 70 percent of its member businesses would be affected by increasing the salary threshold.
The suit states that, by setting an excessively high salary threshold for determining who qualifies as “executive, administrative and professional employees,” the rule departs from the intent established by Congress in the Fair Labor Standards Act. The lawsuit was filed in the U.S. District Court for the Eastern District of Texas.
The state of Texas also announced its own federal lawsuit against the pending overtime rule change, joining a coalition of 21 states. Attorney General Ken Paxton said in a statement the new law would “lead to disastrous consequences for our economy.”