In late September, Oklahoma Attorney General Scott Pruitt joined a suit challenging the new Department of Labor overtime rule. The new rule would go into effect December 1, 2016, and doubles the salary required to be exempt from overtime. Pruitt, and others, are concerned that the new rule will harm small businesses that cannot afford to meet the costly requirements. There are 20 other states that are joining the suit.
What Is the New Rule?
The new rule precludes businesses from exempting employees with salaries up to $47,476 per year from receiving overtime. Before its promulgation, the Department of Labor set the minimum salary requirement at $23,660 per year. Additionally, the rule requires that the salary minimum increase every three years.
The new rule will allow 4 million additional Americans to collect overtime.
This rule follows on the heels of a national movement to increase the minimum wages across the country. Perhaps in response to the attention Vermont Senator Bernie Sanders brought to the issue during his presidential campaign, several states and cities have increased, or pledged to increase, the minimum wage over the past year.
The Argument for the New Rule
The argument for the new rule is that the Department of Labor has not updated the overtime rule in many years, so it does not adequately compensate employees for their hard work. Proponents also argue that the new rule is much simpler than the previous rules. This means that ideally, businesses can more easily understand and apply the rules.
The Argument Against the New Rule
The states argue that the new rule violates the 10th Amendment by mandating the salary scheme for state employees. The 10th Amendment preserves the rights of the states and prohibits the federal government from upsetting the balance between state and federal power. Furthermore, the states claim that this will cause extreme hardship when planning state employee salaries by straining the already thin budgets.
In addition to the states, businesses claim that the new rule will cause layoffs, reduction in hours and many businesses to close down. Furthermore, they argue that three-year increases are unnecessary as the cost of living significantly varies from state to state.
Starting a New Business?
This new rule could cause stress on your new business. Luckily, Rick Dane Moore & Associates Law Firm can help you determine the best way to structure your new business. Additionally, our firm can help solve any business disputes that may arise in the future. Located in Norman, Oklahoma, our attorneys are specialized professionals ready to provide a variety of services. To get started, contact the business law specialists at Rick Dane Moore & Associates Law Firm, P.L.L.C. today at (405) 366-0373.