Beacon Center files lawsuit against exempt employee salary threshold change

By Jon Styf | The Center Square, Aug 16, 2024 - Beacon Center has filed a lawsuit, on behalf of the Association of Christian Schools International, to fight a new U.S. Department of Labor overtime rule that would require anyone making less than $58,000 per year as an hourly, non-exempt employee.

The previous rule had that threshold at $35,568. The new rule is scheduled to go into effect Jan. 1 and includes a stipulation to increase the salary threshold every three years.

The increase came in two parts, with an increase to a threshold of $43,888 on July 1 and the increase to $58,000 on Jan. 1. Several challenges were reportedly filed before the July 1 implementation across the country as well, according to Employment Law Watch from attorneys Reed Smith LLP.

"This new rule is not only unlawful but will also have many unintended consequences,” Beacon Vice President of Legal Affairs Wen Fa said in a statement. “It threatens the livelihoods of small business owners and employees alike. Our client represents thousands of schools in the United States, and this rule will hinder their mission to provide a quality education to the students they serve."

The new rule would require 4.3 million salaried workers to be reclassified nationwide and become eligible for overtime.

The ACSI is a non-profit that has 2,500 member schools nationwide and 97 in Tennessee, where Beacon Center is based.

The ACSI schools say they are heavily impacted as the rule change will happen in the middle of the school year and financial year.

"The timing of this new rule couldn't be worse,” Fa said. “Many schools have already budgeted for the upcoming school year and are ill-equipped to deal with the 2024 rule's drastic changes. We look forward to standing with organizations and businesses in Tennessee and across the country challenging this unfair and blatantly illegal rule."

The Beacon Center lawsuit argues the new rule is similar to a 2016 overtime rule that was thrown out because its increase of the salary-level threshold made “overtime status depend predominately on a minimum salary level, thereby supplanting an analysis of an employee’s job duties.”

It also argues that the automatic threshold increase every three years violates the Administrative Procedure Act’s notice and comment requirement. In the past, threshold increases have gone through a public notice period that allows for objections.

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