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

Sustainability and Green Building | Multifamily

Jul 30, 2026

New Certification Makes NGBS Compliance Easier for Multifamily Projects

A new compliance option in the 2025 National Green Building Standard® (NGBS) is designed to make it even easier to showcase how high-performance features have been incorporated into certain multifamily projects.

Economics

Jul 29, 2026

Fed Holds Rates as Inflation and Energy Costs Cloud Outlook

The Federal Reserve opted to keep its key interest rate unchanged on Wednesday, while signaling that additional rate increases remain possible if inflation does not continue to ease.

View all

Latest Economic News

Economics

Jul 30, 2026

PCE Inflation Eased in June

After reaching a three-year high last month, the Federal Reserve’s preferred inflation gauge eased in June following declines in energy prices amid a temporary truce with Iran. This marked the first monthly decline in six years.

Economics

Jul 30, 2026

Top Ten Builder Share Across Largest Housing Markets

An earlier post described how the top ten builders in the country accounted for 43.6% of new single-family closings in 2025. BUILDER magazine has now released additional data on the top ten builders within each of the 50 largest new home markets in the U.S., ranked by single-family permits.

Economics

Jul 29, 2026

Amid Supply-Side Inflation Pressures, The Fed Holds

The Federal Reserve held the federal funds rate at a target range of 3.5% to 3.75% at the conclusion of its July policy meeting. There were three dissenting votes on the Federal Open Market Committee (FOMC), all of which supported raising the federal funds rate by 25 basis points.