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ICYMI: Onerous Overtime Regulation Halted in Federal Court

In a positive development for job creators last week, the United States District Court for the Eastern District of Texas ordered the U.S. Department of Labor to halt implementation of an onerous new overtime rule which had been set to take effect later this week on Dec. 1. If it had been allowed to take effect, this overreaching change to the Fair Labor Standards Act (FLSA) would have doubled the pay threshold for salaried employees eligible for overtime compensation from $23,660 to $47,892, forcing the nation’s employers to make drastic and difficult to implement changes to their entire employee payment structures.

Recognizing the costly compliance burden threatening employers in North Carolina, the NC Chamber previously joined the U.S. Chamber of Commerce and other national business organizations in urging federal leaders to block the DOL’s new rule. Responding to the federal court’s decision last Tuesday, Randy Johnson, senior vice president of labor, immigration, and employee benefits with the U.S. Chamber of Commerce, echoed the consensus of the nation’s business community: “We are very pleased that the court agreed with our arguments that the Obama administration’s new overtime rule was unlawful and stopped the rule from taking effect on Dec. 1. If the overtime rule had taken effect, it would have resulted in significant new costs – more than $1 billion according to the Congressional Budget Office – and it would have caused many disruptions in how work gets done. Furthermore, the rule would have reduced workplace flexibility, remote electronic access to work, and opportunities for career advancement. This is a great result.”

The proposed overtime rule would indeed be a shock to the system for both job creators and employees. In addition to the emotional and psychological impacts that would be felt by millions of Americans who could view reclassification as a demotion, many employees would have to work much harder simply to keep track of their hours. More than that, however, it was fully expected that plaintiffs’ attorneys would have quickly taken advantage of uncertainty surrounding this sweeping rule to unfairly target businesses with a rash of frivolous lawsuits. As such, this temporary injunction is an encouraging victory for North Carolina’s entire business community – employers and employees alike.

We will continue to keep you updated as this issue progresses. In the meantime, check out this excellent report from the U.S. Chamber of Commerce about how America’s federal regulatory system got so broken – and why we must fix it.

Gary J. Salamido
Vice President, Government Affairs
North Carolina Chamber