NAHB Joins Lawsuit Challenging Department of Labor's New Overtime Rule

Labor
Published
Contact: Thomas Ward
[email protected]
VP, Legal Advocacy
(202) 266-8230

NAHB has joined a coalition of business groups in a lawsuit challenging recent changes to the Department of Labor’s overtime rules.

The complaint, filed in the U.S. District Court for the Eastern District of Texas, alleges that the Department of Labor (DOL) exceeded its statutory authority and acted arbitrarily and capriciously.

Under the Fair Labor Standards Act (FLSA), employers must pay their employees overtime wages for time worked beyond 40 hours each week. However, employees who perform bona fide executive, administrative or professional duties are exempt from the overtime pay requirements under the FLSA.

The DOL relies on a three-part test to determine whether an employee is exempt from overtime rules. To be exempt, the employee must:

  1. Receive a salary that does not vary based on the quantity or quality of their work;
  2. Receive a salary above an established minimum amount; and
  3. Perform primarily executive, administrative or professional duties.

Under the new rule, effective July 1, 2024, the salary threshold will increase from $35,568 to $43,888, and then to $58,656 on Jan. 1, 2025, marking a nearly 65% increase from the current salary threshold. Also, beginning July 1, 2027, salary levels will increase every three years automatically using updated wage data, and these triennial salary level increases will happen without a notice and comment period.

NAHB joined the coalition and lawsuit to prevent DOL from exempting itself from the notice and comment process, which would establish a dangerous precedent for other executive agencies.

Regulated parties often provide valuable knowledge and insight that improve final rules. Moreover, if agencies can issue and enforce new rules that have never been open for public inspection and comment, regulated parties have fewer opportunities to hold agencies responsible.

Additionally, this salary increase is so excessive that it overwhelms the original intent of the overtime exemption, which was to exempt employees in executive, administrative and professional jobs from overtime pay requirements. DOL created the salary level component through regulation to serve as a proxy for serious inquiry into the duties each employee performs. The salary level component of the test did not come from the FLSA, and by raising the salary threshold high enough to overwhelm the rest of the test, DOL is attempting to override the intent of Congress.

While the lawsuit is in process, NAHB is holding a free webinar on Wednesday, June 26, at 1 p.m. ET to better help members understand their obligations under the new rules.

Subscribe to NAHBNow

Log in or create account to subscribe to notifications of new posts.

Log in to subscribe

Latest from NAHBNow

Safety

Dec 12, 2025

Preventing Cold, Flu and COVID Illnesses on Jobsites Starts with a Plan

In the construction industry, working outdoors may appear to create less risk for catching a cold, flu, and COVID-19, but it’s crucial to understand that these illnesses can still spread while working in close proximity in any conditions.

Housing Finance

Dec 11, 2025

FHA Announces Forward Mortgage Loan Limits for 2026

The Federal Housing Administration (FHA) today announced its 2026 Nationwide Forward Mortgage Loan Limits, which provides the maximum mortgage loan limits for single-family homes that are insured by the FHA.

View all

Latest Economic News

Economics

Dec 11, 2025

Homeownership Rate Inches Up to 65.3%

The latest homeownership rate rose to 65.3% in the third quarter of 2025, according to the Census’s Housing Vacancy Survey (HVS).

Economics

Dec 10, 2025

No Risk-Free Path: Fed Eases Monetary Policy

The central bank’s Federal Open Market Committee (FOMC) cut rates a third and final time in 2025, reducing the target range for the federal funds rate by 25 basis points to a 3.5% to 3.75% range. This reduction will help reduce financing costs of builder and developer loans.

Economics

Dec 09, 2025

Construction Labor Market Stable

The count of open, unfilled positions in the construction industry was relatively unchanged in October, per the Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS). The current level of open jobs is down measurably from two years ago due to declines in construction activity, particularly in housing.