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Dept. of Labor Overtime Rule overturned

IIABSC joined lawsuit last year to halt burdensome new overtime regulation

In a striking legal victory for independent insurance agencies and the Big “I”, a federal judge in Texas issued a ruling to overturn the DOL overtime rule. The decision applies on a nationwide basis. The overtime rule (finalized under the Obama Administration) required that many employees who were not previously legally entitled to overtime be paid overtime. 

Pending a possible appeal by the Trump Administration, the overtime rule will not go into effect. Agencies are still legally required to comply with current state and federal labor laws, but they will not be liable for complying with the 2016 federal overtime rule. While agencies do not need to implement changes to comply with the 2016 federal overtime rule update at this time, changes to current law could be made in the future.

(+ Learn more about the recent court decision)

The ruling is the result of lawsuits filed by the Big “I”, other business groups, and 21 state governments. The Big “I” is the only insurance trade association to join the lawsuits for promulgating an overreaching and overly complex rule on overtime pay. 

The Big ‘I’ looks forward to continuing to work with the DOL and the Trump Administration to pursue appropriate small business regulation and to ensure that any potential, future changes to the overtime rule are workable.

In short, under the rule:

  • For any employee who is classified as exempt (does not require overtime pay) under the administrative, executive, professional or computer “white-collar” exemptions and makes less than $47,476, employers must either re-classify them as non-exempt (which would mean they require overtime pay) or raise their salary over the threshold. The $47,476 threshold is a 100 percent increase from the current $23,660.

  • Nondiscretionary bonuses and incentive payments, including commissions, can satisfy up to 10 percent of the $47,476 salary threshold.

  • Any employee who is properly classified under the “highly compensated employee” exemption must earn at least $134,004 in total compensation. The $134,004 threshold is a 34 percent increase from the current $100,000.

  • Starting in 2020, both the $47,476 and $134,004 thresholds will be automatically updated every three years. Thresholds are expected to reach $51,168 and $147,524, respectively.

UPDATE: Nov. 22, 2016


Response from Charles Symington, IIABA Senior VP of External Governmental Affairs:

"The Big ‘I’ is pleased with U.S. District Court Judge Amos Mazzant’s decision to grant an injunction to stop the U.S. Department of Labor’s (DOL) overtime rule from taking effect pending the outcome of ongoing litigation. Earlier this year, the Big ‘I’ joined more than 55 other business groups, as well as 21 state governments, in filing lawsuits challenging the DOL overtime rule. The rule, should it go into effect, will have a significant impact on many Big ‘I’ agencies and their small business and non-profit clients. As litigation continues, the Big ‘I’—the only insurance trade association to sue the DOL—will continue to use all means necessary to fight this overly burdensome rule."

Lawsuit announcement

Our national association joined the U.S. Chamber of Commerce and 12 other national trade associations in September 2016 in filing a lawsuit against the Department of Labor (DOL) to halt its recently promulgated overtime rule set to go into effect Dec. 1. 

“This misguided overtime rule will negatively impact independent insurance agencies and their employees,” says Bob Rusbuldt Big “I” president and CEO. “The Big ‘I’ believes the lawsuit highlights the burdens this regulation places on many businesses across the country, and the harm it will do to many employees who will lose the flexibility and benefits traditionally associated with exempt employment positions. This rule is a jobs killer and it needs to be fixed.”     

The DOL overtime rule, finalized in May, includes raising by 100 percent (from $23,660 to $47,476) the monetary threshold at which employees can qualify for the so-called “white collar” overtime exemptions. The rule pegs the threshold to inflation. The lawsuit was filed in the U.S. District Court for the Northern District of Texas, and asks the court to set aside the new rule. The lawsuit is also seeking injunctive relief barring the DOL from implementing the rule until the court has finished reviewing the case.

“The lawsuit takes aim at the arbitrary and excessive 100 percent increase in the monetary threshold required to be exempt from overtime, as well as the mechanism for automatically updating the threshold,” says Charles Symington, Big “I” senior vice president of external and government affairs. “The Big ‘I’ is the only insurance trade association to join the lawsuit. We believe this lawsuit is a necessary step to help protect our members, many of which are small businesses, against unreasonable regulatory overreach by the Department of Labor.”

A coalition of 21 states also filed a separate challenge to the rule.