Federal spotlight: Iowa among states to challenge federal labor overtime rule

September 22, 2016

This week, Gov. Branstad announced that Iowa joined a coalition of 21 states in filing a federal court complaint challenging the U.S. Department of Labor’s new overtime rule. If implemented, the new rule will more than double the minimum salary overtime threshold for public and private workers without Congressional authorization.

Branstad estimates that the rule would add $19.1 million of additional costs on the State and public universities in the first year. The complaint urges the court to prevent the implementation of the new rule before it takes effect, which is scheduled for December 1, 2016.

Last year, ABI submitted comments to the Department of Labor expressing concerns about the new rule and the challenges to Iowa employers and employees by limiting flexible work schedules and setting a salary threshold 100% higher than the current threshold.

The filed complaint can be read in its entirety here.

Other states and governors who joined this filing include: Alabama, Arizona, Arkansas, Georgia, Indiana, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah and Wisconsin.

On March 13, 2014, President Barack Obama ordered the Department of Labor to revise the Fair Labor Standards Act’s overtime exemption for executive, administrative, and professional employees—the so-called “white collar” exemption—to account for the federal minimum wage.  

On May 23, 2016, the Department of Labor issued the final new overtime rule. It doubles the salary-level threshold for employees to be exempt from overtime, regardless of whether they perform executive, administrative, or professional duties.

After Dec. 1, 2016, all employees are entitled to overtime if they earn less than $913 a week—including state and local government employees.  Additionally, the new rule contains a ratcheting mechanism to automatically increase the salary-level every three years without going through the standard rulemaking process required by federal law.