Associated Builders and Contractors applauded on Nov. 15 the decision of the U.S. District Court for the Eastern District of Texas, which set aside the U.S. Department of Labor’s controversial 2024 final rule, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees.” The rule changed overtime regulations under the Fair Labor Standards Act.

The court found that the overtime rule’s July 1 increase was unlawful, as well as the scheduled increase on Jan. 1, 2025. Specifically, the DOL’s final rule increased the minimum annual salary level threshold for exemption to $43,888 on July 1, and it was scheduled to increase to $58,656 on Jan. 1, 2025. In addition, salary thresholds would have been updated every three years, starting on July 1, 2027.

“This decision is the correct one and an important win for ABC members and the rest of the regulated community,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “It’s also no surprise. In 2017, this court permanently enjoined the DOL’s 2016 overtime rule on similar grounds, writing that the rule increased the minimum salary level threshold for exemption far beyond a level which the DOL is permitted to adopt. The court also found unlawful the automatic indexing provision in the new rule that would have further increased the salary threshold without the notice-and-comment rulemaking required by the Administrative Procedure Act.

“Some ABC members employ workers who would have lost their exempt status as of Jan. 1 because of the 2024 overtime rule’s scheduled increase,” Brubeck added. “This would have disrupted the construction industry, specifically harming small businesses, restricting employee workplace flexibility in setting schedules and hours, and hurting career advancement opportunities.

“The 2024 rule’s radical increase in the salary threshold for exemption would have also further complicated the current economic outlook,” Brubeck continued. “Multiple industries, like construction, are grappling with uncertain economic conditions, such as high interest rates, supply chain disruptions, materials price inflation 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 would have exacerbated its harmful impact on businesses and added to rampant inflation that is already harming the economy as a whole.”

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 challenging the DOL’s overtime rule.

On Nov. 7, 2023, ABC called on the DOL to withdraw the proposed rulemaking. 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 industries and public, nonprofit and education sectors.

In 2016, the Obama administration issued a final overtime rule that would have doubled the minimum salary level for exemption from $23,660 to $47,476 per year. ABC, along with several other business groups, sued the DOL in federal court and succeeded in blocking the rule from taking effect.