Attorney General Ken Paxton on Tuesday led 21 states in suing the U.S. Labor Department over the new overtime rules in a federal district court in Texas. The Texas Association of Business, the U.S. Chamber of Commerce and other business leaders filed a similar lawsuit later in the day.
The new regulations — which go into effect in December — raise the overtime eligibility threshold to $47,476 a year from $23,660 a year. Administration officials have estimated that the change could benefit more than 4 million Americans — and hundreds of thousands of Texans.
But both lawsuits accuse the Obama administration of overreach, with Paxton calling the new rules part of a “radical leftist agenda.”
“Once again, President Obama is trying to unilaterally rewrite the law,” he said. “And this time, it may lead to disastrous consequences for our economy.”
On Wednesday, U.S. Sen. Sherrod Brown (D-Ohio) blasted the lawsuit aimed at undermining the new Department of Labor overtime rule, which will make more than 130,000 Ohioans eligible for overtime pay.
“Plain and simple: if you work extra hours, you should earn extra pay,” said Brown. “It’s outrageous that the state of Ohio is wasting taxpayer dollars trying to block hard-working Ohioans from getting the overtime pay they’ve earned.”
Brown joined U.S. Secretary of Labor Tom Perez and Vice President Joe Biden in Columbus in May to announce the new rule to raise the salary for overtime-eligible workers from $23,660 per year to $47,476 per year. Brown had called on the Administration repeatedly to make more workers eligible for overtime pay.
Perez this week said he is “confident in the legality of all aspects of our final overtime rule.”
“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,” he said.
Advocates for the overtime overhaul were also quick to criticize the lawsuits. Lawrence Mishel, president of the liberal Economic Policy Institute, said sarcastically that the salary standard had also been raised in the past by “other communists like George W. Bush and Gerald Ford.”
“It’s remarkable that somehow they think it’s an overreach,” he said. “But it’s not an overreach when an employer asks a $25,000-a-year employee to work 20 hours of overtime for free?”
Paxton — like his predecessor, Republican Gov. Greg Abbott — has been no friend to the Obama administration. He’s challenged the federal government on several fronts, with his focus more recently trained on transgender rights being pushed by the White House.
The latest suit pairs Paxton with a coterie of Republican officials from Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, Utah and Wisconsin.
The business-led lawsuit, meanwhile, features chambers of commerce from across Texas, including those in Plano and greater Irving.
The efforts take aim at one of President Barack Obama’s key economic initiatives.
Millions of American workers have been exempt from overtime rules because they are classified as executives, administrators or professionals. Even if they work more than the standard 40-hour workweek, they don’t enjoy the perk of time-and-a-half pay for those extra hours.
Those exemptions don’t apply, however, if the worker is paid less than $23,660 a year.
Obama and others sought to update the rules — last changed in 2004 — to boost store managers, office supervisors and other middle-income, white-collar Americans. The new rules will double the threshold amount, opening up a whole new class of workers to overtime pay.
“We’ve got to keep making sure hard work is rewarded,” Obama wrote in an op-ed last year. “That’s how America should do business. In this country, a hard day’s work deserves a fair day’s pay.”
Texas groups responded to Paxton’s lawsuit with dismay.
State Democratic Party director Crystal Perkins accused the GOP of scoring political points at the expense of Texans. Texas AFL-CIO president John Patrick said the suit showed “zero concern for working people who are forced to put in free hours at the whim of their employers.”
But the new rules have already faced criticism from business groups.
Some have said the change will burden businesses and, ultimately, consumers. Others predicted that businesses will end up cutting off staffers at 40 hours. And others have said the issue is not that the threshold increased, but that it increased by so much and with other moving parts.
“The Department of Labor has really exceeded its statuary authority,” said Texas Association of Business president Chris Wallace, who said he’s heard concern from businesses across the state. “It’s not good for business.”
The lawsuits challenge the new rules on multiple fronts.
The states’ suit blasted a new provision that would increase the salary standard every three years, arguing that it would deprive the opportunity for feedback about those future changes. And it said the overall focus on the salary threshold confuses the requirements laid out in the law.
The Labor Department’s “use of, and conclusive emphasis on, the salary test defies the statutory text … congressional intent, and common sense,” the state lawsuit said.
The state lawsuit also dwelt at length on the potential impact on government. It went so far as to suggest that, under the new rules, “the federal executive could deliberately exhaust state budgets simply through the enforcement of the overtime rule.”
Bennett Sandlin, executive director of the Texas Municipal League, said local governments do have concerns about the new overtime rules.
He said his organization had provided some research to Paxton’s office on how many positions across the state could potentially be affected. He said the biggest worry is that some cities might have to hire more employees at taxpayer expense.
“It could have a significant effect,” he said.
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