WASHINGTON — The Department of Labor (DOL) has issued a final rule updating overtime regulations. The rule will significantly increase the overtime threshold to include all employees making up to $58,656 annually. The rule will take effect in two steps, with an increase in July of this year and another in January 2025.

Sean Kennedy, executive vice president of Public Affairs for the National Restaurant Association, issued the following statement about the change, saying, “This rule will exponentially increase operating costs for small business restaurant owners who are trying desperately to maintain menu prices for their customers. And because DOL created a one-size-fits all rule based on national income data, rather than regional data, this change is going to disproportionately impact restaurant owners in the South and Midwest.

“The Association and Restaurant Law Center pushed back on a significant increase following so soon after an increase just four years ago. Business conditions have changed significantly for restaurant operators in that time. It’s unfortunate that DOL did not heed our concerns, especially as it relates to regional discrepancies and the burden of automatic increases every three years.”

Other businesses and trade associations have expressed concern, culminating in a lawsuit filed against the DOL on May 22 with the US District Court for the Eastern District of Texas, Sherman Division.

Intentionally filed with the Texas court, the lawsuit cites a previous case filed before the court, regarding DOL’s 2016 Rule that sought to increase the minimum salary for overtime exemption. The court prevented the rule from being implemented and declared DOL’s attempt to automatically increase the salary threshold on a triennial basis thereafter unlawful, according to the complaint.

“Plaintiffs are back before this court because the department has done it again,” the complaint said. “In direct defiance of this court’s previous order, the department has issued yet another rule raising the minimum salary for the EAP exemption far beyond a level which DOL is permitted to adopt, and again included an unlawful triennial ‘escalator’ provision.”

The organizations requested expedited consideration of their complaint, considering the first phase of the new rule is scheduled for July 1, 2024, and the full impact will be implemented Jan. 1, 2025.

The plaintiffs include the Plano Chamber of Commerce, American Hotel and Lodging Association, Associated Builders and Contractors, International Franchise Association, National Association of Convenience Stores, National Association of Home Builders, National Association of Wholesaler Distributors, National Federation of Independent Businesses Inc., National Retail Federation, Restaurant Law Center, Texas Restaurant Association, Cooper General Contractors and Dase Blinds.