Status
On May 22, ABC joined a coalition of business groups in filing a complaint in the U.S. District Court for the Eastern District of Texas, Sherman Division, challenging the U.S. Department of Labor’s controversial final rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees, which will change overtime regulations under the Fair Labor Standards Act. Read ABC’s news release announcing the lawsuit.
Issued on April 23, DOL’s new final rule increases the minimum annual salary level threshold for exemption in two phases: from the current level of $35,568 to $43,888 on July 1, 2024, and to $58,656 on Jan. 1, 2025. In addition, salary thresholds will update every three years starting on July 1, 2027. ABC issued a news release opposing the rule.
Virtually all of ABC’s members employ workers who qualify for exempt status, and like the unlawful 2016 overtime rule, the DOL’s 2024 rule will reclassify a massive amount of ABC member employees who currently qualify for exempt status as nonexempt. This will disrupt the entire construction industry, specifically harming small businesses, as the rule will greatly restrict employee workplace flexibility in setting schedules and hours, hurting career advancement opportunities.
In addition, the 2024 rule’s radical increase in the salary threshold for exemption will further complicate the current economic outlook. Multiple industries, like construction, are grappling with uncertain economic conditions such as inflation, supply chain disruptions, high materials prices and workforce shortages, all of which push operational costs ever higher. Specifically, ABC estimates that the construction industry must hire more than half a million additional workers in 2024 to meet demand. The rule’s triennial automatic indexing provision will exacerbate the harmful impact on businesses and add to rampant inflation that is already harming the economy.
On Nov. 7, 2023, ABC submitted comments to the DOL in response to the proposed rulemaking, calling on the DOL to withdraw it. ABC also signed onto coalition comments criticizing the overtime proposed rule, joining 244 national, state and local organizations representing employers from a wide range of private industry and public, nonprofit and education sectors.
DOL resources on the final rule:
Additionally, read Littler Mendelson’s analysis of the overtime final rule.
Desired Outcome
ABC called on the DOL to withdraw the overtime rule, which is particularly harmful to small businesses.The DOL should recognize that the construction industry is currently up against increased geopolitical uncertainty, high materials prices, inflationary pressures and workforce shortages.