IFA Challenges the Department of Labor Overtime Rule

May 22, 2024

Regulation will force many franchised businesses to cut staffing and impact products and services offered to consumers

WASHINGTON – The International Franchise Association (IFA) today joined a coalition lawsuit in the U.S. District Court for the Eastern District of Texas challenging the Department of Labor’s (DOL) overtime rule that increases the overtime exemption salary threshold to $58,656.

If allowed to take effect, beginning July 1, 2024, any employee in any location in the U.S. who earns less than the initial threshold of $43,888 is “non-exempt” and eligible for overtime. The threshold increases to $58,656 on January 1, 2025. The new rule also provides for automatic increases of the threshold every three years beginning in 2027.

“In this uncertain economy, this excessive and unwise regulation will force many franchised businesses to cut jobs and demote many salaried workers to hourly to manage costs,” said Michael Layman, IFA senior vice president of government relations and public affairs. “IFA successfully challenged the last Overtime rule, and we are joining this lawsuit because the latest iteration goes even further and would have far-reaching and dire consequences.”

IFA also supports the Congressional Review Act (CRA) resolution introduced by U.S. Tim Walberg (MI-05) that would block the rule from going into effect. U.S. Senator Mike Braun (R-IN) is leading the Senate companion.

Other plaintiffs in the lawsuit include: the U.S. Chamber of Commerce, American Hotel and Lodging Association, Associated Builders and Contractors, Cooper General Contractors, Dase Blinds, National Association of Home Builders, National Federation of Independent Business, National Association of Convenience Stores, National Association of Wholesaler-Distributors, National Retail Federation, Plano Chamber of Commerce, Restaurant Law Center and Texas Restaurant Association.

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About the International Franchise Association:

Celebrating over 60 years of excellence, education, and advocacy, the International Franchise Association (IFA) is the world’s oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations, and educational programs to protect, enhance and promote franchising and the approximately 806,270 franchise establishments that support nearly 8.7 million direct jobs, $858.5 billion of economic output for the U.S. economy, and almost 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees, and companies that support the industry in marketing, law, technology, and business development.