New labor rules being arbitrarily foisted on the private and public sectors by the Obama administration in his final year in office will cost the economy $80 billion — nearly half of that, $33 billion, due to a new rule raising the number of workers who must be paid overtime by 12.5 million — and eliminate 150,000 jobs over the next decade, according to the the National Association of Manufacturers.
Nevada is leading the way in challenging the overtime change that increases the wage floor for executive, administrative and professional (EAP) workers who must be paid time and half for any hours worked in excess of 40 hours from $455 per week to $913 per week, starting on Dec. 1.
Recently Nevada’s three Republican Congressmen Joe Heck, Cresent Hardy and Mark Amodei joined in a near-party-line vote in the House to delay the overtime rule change for six months. Democrat Dina Titus, of course, opposed it. On to the Senate.
But the challenge most likely to be effective is a legal challenge by 21 states in which Nevada is taking the lead — Nevada v. U.S. Department of Labor — which was filed recently in the Eastern District of Texas. In addition to Nevada and Texas, the challenging states are: Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, New Mexico, Ohio, Oklahoma, South Carolina, Utah and Wisconsin.
The suit challenges the new overtime rule as a usurpation of the powers granted Congress by the Constitution and a violation of the Federalism principle embodied in the Tenth Amendment.
Nevada Attorney General Adam Laxalt said in a press release announcing the litigation, “Longstanding federal law requires an overtime exemption for ‘bona fide executive, administrative, or professional’ employees. Ignoring this federal law, the Department of Labor by executive fiat is forcing state, local and private employers to pay overtime to any employee who earns under a certain amount, regardless of whether that employee is actually performing ‘executive, administrative, or professional’ duties.”
The Fair Labor Standards Act was passed in 1938 and required that workers engaged in interstate commerce be paid a federal minimum wage and overtime for any hours worked in excess of 40 hours a week. It included an exception for “any employee employed in a bona fide executive, administrative, or professional capacity …”
Later amendments applied the law to all state and local government employees, but in 1976, according to the lawsuit, the Supreme Court ruled the Tenth Amendment limited Congress’s power to impose such rules on the states.
The court backed off that finding a decade later and said, “The political process ensures that laws that unduly burden the States will not be promulgated.”
Au contraire, says the lawsuit, “Subsequent Commerce Clause, Tenth Amendment, and Eleventh Amendment decisions call the continuing validity” of that decision into question.
In March Obama ordered the labor department to change the overtime rule. “Because these regulations are outdated, millions of Americans lack the protections of overtime and even the right to the minimum wage,” his memo said.
Nevada v. Labor spells out the especially onerous burden the overtime rule places on state and local governments, “Because the Plaintiff States cannot reasonably rely upon a corresponding increase in revenue, they will have to reduce or eliminate some essential government services and functions. For example, certain infrastructure and social programs may be reduced or cut. The Plaintiff States’ budgets will have less discretionary funds available because, as result of the new federal overtime rule, a greater percentage of their funds will be devoted to employment costs against the States’ will. These changes will have a substantial impact on the lives and well-being of the Citizens of the Plaintiff States,” adding that private employers will suffer the same ill effects.
The plaintiffs note that the Supreme Court tossed out as unconstitutional a provision in ObamaCare that required states to expand Medicaid coverage, calling that “economic dragooning” — an apt comparison.
The press release accompanying the lawsuit quoted the Nevada Resort Association, whose members employ nearly a third of Nevada workers and provide almost half the state’s tax revenue, as saying, “By nearly doubling the threshold amount for exempt employees, the regulation results in abrupt increases in taxes and labor costs. Such dramatic increases are particularly difficult to manage in an industry with tens of thousands of employees and in which labor costs are a significant percentage of total expenses.”
The courts and Congress can’t act quickly enough to fend off this job and economy killing move by Obama.
Thomas Mitchell is a longtime Nevada newspaper columnist. You may email him at firstname.lastname@example.org. He also blogs at http://4thst8.wordpress.com/.