States, Businesses File Lawsuit Against New Overtime Rules

Twenty-one states and a coalition of business and industry groups filed separate federal lawsuits against the U.S. Department of Labor, U.S. Labor Secretary Thomas E. Perez and the top Wage and Hour Administrator, David Weil, to try to block the federal overtime regulation changes. The changes are set to go into effect on Dec. 1, and will make about 4.2 million workers newly eligible for overtime pay. These workers are currently classified as executive, administrative and professional. The states involved in the lawsuit say the new regulations are a federal overreach and the business groups — including the U.S. Chamber of Commerce and the National Retail Federation — say the laws will hurt business.

Total Retail's Take: Under the new overtime law, workers who make a salary of less than $47,476 a year will qualify for overtime pay, regardless of duties. However, some believe that instead of increasing salaries to raise workers above the overtime threshold, businesses will reclassify workers as hourly. This would remove existing benefits and flexibility and, in turn, lower morale and the customer experience because training may be hindered or managers may have to put their efforts into other tasks. The overtime law is one that retailers are following closely, as it figures to significantly impact their store associates.