InsideSources

Industry leaders and federal regulators are convinced 5G will radically transform the internet and the economy, but is the hype getting ahead of the tech?

Last week the 5G hype ramped up with Samsung debuting its 5G technology and POLITICO hosting a 5G event with industry leaders and federal regulators in Washington, D.C.—hype inspired by the extremely high speed 5G makes possible.

But how fast is 5G?  According to Qualcomm’s tests of the technology, download speeds are at about 100 megabits per second (Mbps) compared to just 8 Mbps with LTE. Data downloads will be 100 times faster than 4G.

One of the areas where 5G speeds are creating the most excitement — and arguably has the most potential — is autonomous vehicles (AVs).

At the POLITICO event, for example, the U.S. Chamber of Commerce’s Assistant Policy Counsel of Chamber Technology Engagement Center (C_TEC) Jordan Crenshaw said that 5G is a “top consideration” for AV developers because 4G networks don’t have fast enough download/upload speeds to support the connections AVs need.  AVs require a strong wireless connection in order to adopt data processing speeds that can imitate a human driver, Forbes reported.

According to Qualcomm, 5G’s “high throughput and ultra-reliable low latency communication (URLLC)” theoretically allows cars to communicate with each other “without dependency or reliance on wide area network coverage.”  AVs must be able to communicate with each otherin order for them to safely use the road.

“[5G] will enable autonomous vehicles to directly share their perception of the road, road conditions and surroundings, with each other and with road infrastructure in an efficient manner,” Qualcomm said in a blog post. “Autonomous vehicles rely on several different kinds of sensors to be able to detect and infer their surroundings and road conditions. While sensors such as radar, and camera systems are essential, these sensors are limited by their line-of-sight (LOS) operation. [5G] direct communication complements the capabilities of these sensors by providing 360-degree non-LOS (NLOS) awareness, extending a vehicle’s ability to detect farther down the road — even at blind intersections or in poor weather conditions.”

AVs are just one use case of how 5G could transform various industries, of course.  It could also enable and encourage the telehealth movement, which seeks to provide remote care and assistance via video call to consumers. Smartphones will have better video streaming, lower latency rates and extended battery life. In fact, 5G speeds are expected to be so fast that they will surpass cable and satellite internet, effectively allowing mobile telecomm companies like AT&T, T-Mobile and Verizon to compete with the likes of Charter Communications, Comcast and other local internet service providers (ISPs).

And then there’s the economic impact of this new level of technology: The Federal Communications Commission (FCC) believes that its plan to rollout 5G nationwide will save more than $2 billion “in unnecessary fees” and stimulate $2.5 billion in investment. And economists who’ve reviewed these estimates agree—If 5G lives up to the hype.

Not everyone is so sure that it can. Projected speeds of new wireless rollouts are rarely match reality. The peak rate of wireless users are usually only 15 percent of the projected peak rate, according to industry experts, and Wi-Fi routers in homes often only offer one third to half of the advertised speed.

If actual 5G speeds don’t reach the expected speeds, then 5G won’t enable AVs.

And then there’s the infrastructure problem. Self-driving cars can’t “self-drive” beyond the range of the network, as Motherboard reported in a recent article.

“The current geographical disparities in internet access mean it’s probably not going to happen for at least another 15–20 years,” they conclude.

According to a report from ZDNet, the key with 5G is reliability. It doesn’t matter how much faster the 5G speeds are, if they aren’t consistent and reliable, AVs and other 5G-empowered industry advancements won’t get far.

Then there’s the issue of actually processing the data 5G-connected sensors on cars will provide. It’s one thing to have a super-connected car, and quite another to know how to have the processing bandwidth to handle what it is providing.

Some industry analysts are skeptical 5G will be anything more than a “mobile upgrade:” Barclays analysts doubt, for example, that 5G will replace broadband internet in homes and businesses without a dramatic increase in investment.

It’s temping for industry innovators to oversell the promises of a new technology like 5G. Based on the current data, the right word to describe its impact is likely “evolution” rather than “revolution.”  But if comes close to living up to the hype, it will make a major impact on our economy, our workplaces and our daily lives.

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Worker centers have become an increasingly influential force within the labor movement with their ability to function in ways that traditional unions legally cannot, according to a report Wednesday.

Worker centers are activist organizations that fight to promote work-related laws and organize workers that aren’t represented by a traditional union. They are primarily funded by political foundations. They are unique in that they are not restrained by federal laws that limit union activities – sometimes helping unions recruit members in ways they are unable to do.

The Workforce Freedom Initiative, a division of the U.S. Chamber of Commerce, looked at the emerging role of worker centers over the past four years in its report – particularly in regards to how they have supported union organizing. The report also highlights how unions, political foundations, and other advocacy groups have funded these organizations.

“Arguably, they appeal to their members in part because these centers are able to connect with them in ways that unions cannot, and in part because, operating beyond the boundaries of established labor laws, they have more degrees of freedom in the types of activities they undertake than are available to their more traditional counterparts,” the report states.

The report also serves as an update to an earlier analysis which was originally published in 2013. Both reports determined that worker centers essentially function as hybrid organizations with some attributes of traditional unions –  particularly in how they organize and sometimes recruit workers.

Worker centers are different than traditional unions in that they typically do not engage in negotiating contracts. The new report, however, did find that there have been more attempts to deal with employers regarding the terms and conditions of employment since 2013.

The report also breaks down funding for worker centers based on direct and indirect support, and whether that funding came from a labor union or political foundation. Foundations account for the 10 largest worker center donors. The Ford Foundation, for example, was found to be the biggest donor. It contributed $44,003,000 to worker centers and related entities between 2013 and 2016.

Jobs with Justice (JWJ) plays a key role in how unions have interacted with the worker center movement. JWJ was founded by leaders within the labor movement in 1987 and has since helped to mobilize support for union organizing and worker justice campaigns. It has directly supported and founded several worker centers across the country which carry out its political objectives on the local level.

The JWJ receives funding from both labor unions and political foundations.  The Service Employees International Union (SEIU), for example, contributed $3.1 million to the group between 2013 and 2016. Additionally, the Communications Workers of America contributed $824,000 over that same time.

The SEIU is perhaps one of the most influential unions when it comes to the worker center movement. The report highlights eight worker centers the union founded – most of which operate as organizing committees for the union. The Fast Food Workers Committee is its largest worker center, receiving $14 million from the union between 2013 and 2016.

The report concludes that worker centers are generally looking more like traditional unions in how they are defined under federal labor law. At the same time, they are unlikely to become unions given the legal restrictions that would then be imposed on them – like limits to picketing.

“Worker centers can go where unions cannot, whether demographically, culturally or politically, or perhaps even with regard to engaging in things like secondary activity or unlimited picketing,” the report states. “Once institutionalized they would almost inevitably lose their flexibility and, one suspects, even risk their appeal.”

The report adds that this dynamic has created a unique relationship between traditional unions and worker centers. While unions have benefited from worker centers, they remain at an arm’s length from the greater movement. At the same time, unions have used the model to help organize and recruit workers, even forming their own worker centers like in the case of the SEIU.

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Youth employment experts shared their viewpoints and concerns Wednesday on the current economic state of younger adults during a congressional hearing.

Younger adults have faced economic obstacles in the decade since the last recession. The youth unemployment rate, encompassing those 16 to 24 years old, is nearly twice the national average at 11.5 percent. The House Ways and Means Human Resources Subcommittee held a hearing to explore ways to decrease youth poverty and unemployment.

The situation young adults find themselves in is particularly concerning considering the economy has made significant gains over the past year. Younger adults are doing better, but at a rate that lags behind the rest of the country. The hearing highlighted a number of solutions to help address the problem.

“Across the country, there are over five million youth who are out of school and out of work, 16 to 24 years old,” Martrice Manuel, an associate direct for the Alternative Schools Network, said during the hearing. “This situation affects youth and young adults of all races and across the inner city, suburban, and rural areas of our country.”

Many younger adults do not possess the skills needed to find a stable career. The issue is only getting worse with how much technology has radically changed the labor market. Year Up, a non-profit, has been working to solve the problem by helping younger adults find opportunities that provide needed skills and experience.

“I would like to begin today by describing the talent crisis currently facing our country,” Year Up founder Gerald Chertavian said. “Our education and training systems are increasingly both out of touch with employers’ needs and out of reach for young adults. Correcting this failure is both a moral imperative and an economic necessity.”

Chertavian adds there are millions of unfilled jobs younger adults are having trouble getting. Employers simply are having trouble finding people with the skills and talents they need. Chertavian notes the issue stems from how the country educates and trains people.

“To be clear, our American education and workforce systems are not adequately preparing young adults for success in the labor market or to meet the human capital needs of business,” Chertavian said. “These education and workforce market failures threaten not only the dignity of America’s youth but also our nation’s economic prosperity.”

Year Up has partnered with a number of private-sector companies to find ways for younger workers to gain needed skills and experience. JPMorgan Chase, Salesforce, LinkedIn, Bank of America, and Microsoft are among the companies involved in the program.

Manuel notes federally-funded programs have also been a useful way to help younger adults. There are numerous federal and local programs aimed at helping high school dropouts, younger adults in poverty, and those struggling to find work or experience. Manuel points to Chicago where federal programs have been deployed and removed.

“The situation of youth joblessness continues to increase in Chicago, particularly since 2000 when the federal government ended its commitment to a summer youth employment program for low-income youth,” Manuel said. “This left over 600,000 low-income youth and young adults across the country and over 30,000 youth and young adults in Chicago with no opportunity for employment.”

Martrice adds the problem was improved when similar federal programs were redeployed in 2009. The Alternative Schools Network does similar work by providing training and opportunities to younger adults, especially those in the inner-city.

“There are many federal, state and local programs designed to help families living in poverty meet basic needs, but addressing the long-term cycle of poverty takes much more than these programs are often able to provide,” Cheryl Oldham, vice president of education policy at the U.S. Chamber of Commerce, testified. “While youth in poverty often face many barriers, a good education and job skills are imperative to moving up the economic ladder. A quarter of Americans with no high school diploma live in poverty.”

Oldham suggests approaching the problem with multiple solutions. Some of the ways in which younger adults can find opportunities don’t even require federal funding. Employers provide a range of programs that help them find and train potential employees.

“Many youths, particularly those who are at-risk, are simply not aware of the many opportunities that exist in the labor market because they have not been exposed to professional careers,” Oldham said. “There is no better way to tear down this barrier than by engaging youth and bringing them into the workplace. Internships, apprenticeships, work-study, and job shadowing are all examples of ways to provide these opportunities, which often have an academic component.”

The U.S. Census Bureau found in a report last year that 43 million Americans were living below the federal poverty line as of 2015. The report also found 14.5 million of those living below the poverty line were under the age of 18. The poverty rate overall has been trending in a generally positive direction.

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House lawmakers held a hearing Wednesday to discuss whether federal labor law should supersede tribal sovereignty.

The federal government dictates a range of workplace rules employers must follow. The right of employees to join labor unions and the right to collective bargain are critical components to these laws. The House Education and the Workforce committee held a hearing to discuss a bill that would give tribes more control regulating those workplace rights.

Native American tribes currently do not have the ability to regulate their own labor rules because they are essentially considered employers. The bill would treat tribes similarly to local governments by adding them to a list of excluded entities. Supporters argue the bill corrects a misguided decision by the National Labor Relations Board (NLRB).

“The Tribal Labor Sovereignty Act is a simple fix that adds tribes to the list of governmental entities exempt from the National Labor Relations Act,” National Congress of American Indians President Brian Cladoosby said during the hearing. “In doing so, the legislation reinforces a critical part of Congress’s efforts to support governmental parity for tribal governments and respect for sovereignty.”

Republican Rep. Todd Rokita introduced the legislation Feb. 9. The bill would reverse standing case precedents that has determined tribal labor rights since 2004. The National Labor Relations Board (NLRB) at the time began asserting more jurisdiction over tribes. Unite Here regional political director John Gribbon warned most workers on tribal land aren’t members of the tribe.

“They cannot petition the government of the tribe,” John Gribbon said during the hearing. “They cannot elect chairpersons or members of the tribal counsel. They do not have any influence over that. Contrary to that, local and state employees do.”

The National Labor Relations Act (NLRA) guarantees employees have certain workplace rights. They can organize into unions, negotiate for better working conditions, and engage in collective action like strikes. The bill would empower tribes by excluding tribal enterprises located on tribal land from the act.

The NLRA recognizes there is a fundamental difference between private and public employers. The law excludes local and state governments for that very reason. The National Labor Relations Board (NLRB) currently asserts jurisdiction over the commercial enterprises located on a tribal reservation because tribes aren’t exempt.

“For nearly 70 years the board respected Native American sovereignty and did not apply its jurisdiction under the National Labor Relations Act over tribes,” Republican Rep. Tim Walberg said during the hearing. “The reason was simple. While the NLRA provides important protections for workers, it is a private-sector labor law that specifically excludes state, local and federal government employees.”

Republican Sen. Jerry Moran introduced companion legislation in the Senate which is still being considered. The U.S. Chamber of Commerce led a coalition letter in support of the bill. The letter argues the bill would further respect and promote tribal sovereignty.

Former President Barack Obama was critical of past attempts to enact similar legislation. His administration opposed the policy despite openly supporting the concept of tribal sovereignty. The administration argued there needed to be a balance between strengthening tribal sovereignty and federal laws meant to protect workers.

The legislation would also have a significant impact on those who work for tribe-owned enterprises. They would no longer be able to file a labor violation claim against the tribe. Employees currently can file a claim against tribal employers over which the NLRB asserts jurisdiction.

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The U.S. Chamber of Commerce released a report Tuesday detailing several federal labor board decisions that are in desperate need of reform.

Former President Barack Obama made major changes to labor law during his time in office. The National Labor Relations Board (NLRB) was a driving force behind these policies. The board issued the changes through case precedents when making decisions on labor dispute cases.

President Donald Trump now has a chance to upend these workplace decisions. The Workforce Freedom Initiative (WFI), a division within the Chamber, highlighted the most problematic decisions in its report. The report focuses on micro-unions, joint-employment, union elections, and employer rights, among others issues.

“The Obama-era NLRB’s flawed interpretation of the National Labor Relations Act led to a massive regulatory overreach that favored unions at all costs,” WFI Vice President Glenn Spencer said in a statement provided to InsideSources. “Congress and the Trump administration can restore common sense to labor law by appointing new Board members who will properly administer the NLRA, and by making sensible legislative fixes to the statute.”

The NLRB allowed unions to form a new type of bargaining unit known as micro-unions back in 2011. A micro-union focuses on a specialty group of employees instead of the entire workplace. Essentially, a union doesn’t need to get a majority vote to create a bargaining unit, but rather win support within a subgroup of workers.

“The Board’s new policy favors union interests because smaller groups of employees are typically easier to organize,” the report said. “As applied, the Specialty Healthcare decision means that the NLRB approves almost any bargaining unit proposed by a union, regardless of how small or fragmented.”

The report adds the decision may also violate the National Labor Relations Act (NLRA). The NLRB expanded what is known as the joint-employer standard during the last administration. The board can now more easily make an employer responsible for the employees and labor liabilities of a company it contracts with.

“The Board’s decision represented a significant policy change that expanded the types of businesses that may be deemed joint employers,” the report said. “The new standard has exposed a broad range of businesses to workplace liability for workplaces they do not control and workers they do not employ.”

The report adds the expanded standard overturned more than 30 years of case precedents. The standard used to be determined based on whether the company had direct control over the employees of the other. The new standard looks at indirect control, which critics argue is too vague.

“Direct and immediate control was generally understood to include the ability to hire, fire, discipline, supervise, and direct the other entity’s employees,” the report said. “By replacing the direct and immediate control standard with the ambiguous indirect and potential control test, the NLRB has made it difficult to predict which businesses will be liable for the workplace policies of another employer.”

The NLRB also made changes to how union elections are held. Those opposed have called the changes the ambush election rules because it shortens the amount of time union elections are held. The agency argued it was to streamline the process.

“Final Rule governing representation-case procedures is designed to remove unnecessary barriers to the fair and expeditious resolution of representation questions,” the NLRB has stated. “The Final Rule will streamline Board procedures, increase transparency and uniformity across regions, eliminate or reduce unnecessary litigation, duplication and delay.”

Those opposed have contested it allows unions to organize a workplace before employees really have the chance to understand everything. The report argues it also disenfranchises employers by limiting the time frame they can petition for a pre-election hearing.

“The ‘ambush election’ rule made significant changes to how election petitions are processed and how employers must respond to these petitions,” the report said. “In so doing, it reduced the time frame for representation elections from an average of 42 days to as few as 10.”

The report lists several more changes that the new administration should address. The issues primarily focus on employer rights. Recent decisions now allow unions to access employer email systems, and picket on company property. It also warns decisions have eroded management rights clauses which give employers the ability to manage their businesses without interference from the union.

Trump has a clear path to changing or completely upending these recent changes. The president gets to nominate the deciding vote on the five-member board. The new board could start deciding cases based on a revised or previous standard to set precedents for how future cases are decided.

The NLRB, however, wasn’t alone in making changes to workplace law. Trump could do away with executive orders by signing news ones, but other changes may be more difficult. Federal regulations, for instance, must be proposed, and go through a questioning and review process that could take months or even years.

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Americans continue to drop out of the labor market as employment numbers reach catastrophic levels, warned a panel of experts Thursday.

The economy has lost a staggering percentage of its workforce over the decades. The number of people employed or looking for work as a percentage of the population sits at only 62.7 percent. Experts warned during the panel discussion that the numbers show a quiet catastrophe.

“I’m not trying to be hyperbolic in describing this as a quiet catastrophe or calamity,” American Enterprise Institute Economist Nicholas Eberstadt said. “From 1965 to the present we’ve seen a really wrenching decline in employment to population ratio, what we call work rates, and we’ve also seen a surge in men exiting the labor force.”

Eberstadt added the employment rate for men last year was lower than in 1940. He notes that even after adjusting for retirement and adult students there would be an additional 10 million workers if we at an employment ratio like in 1965.

“So it’s not hyperbolic to say we’re living with a sort of Depression scale problem for employment for men,” Eberstadt said. “The fastest growing segment of our working age, male population has been those that are out of the labor force over the last 50 years, growing three times as fast as the male working age population as a whole.”

Eberstadt blamed work incentives for much of the problem. Adults are less obligated to work because of things like social safety net programs. Manhattan Institute Scholar Oren Cass notes incentives are part of the problem but there are other issues which underline a critical fault with the labor market.

“I think what you have instead is a labor market that has malfunctioned,” Cass said. “The demand size is not providing wages at a level that the supply side is willing to provide the labor at. Some of that is cultural from the supply side, some of that is the nature of the safety net that provides an alternative.”

Cass adds education and automation are also adding to the problem. Employers have been more easily able to replace workers with machines and robots as technology improves. The educational system might also not be providing workers with the skills they actually need.

The panel was part of a conference on how to address poverty and economic mobility. The American Enterprise Institute, the U.S. Chamber of Commerce, the Manhattan Institute and other right-leaning organizations hosted the event to discusses the issues. It included numerous speakers and panels throughout the day.

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House Speaker Paul Ryan spoke at an economic conference Thursday on how to use conservative principles in the fight against poverty.

Ryan argued that economic mobility is an inherently American virtue that needs to be restored. He detailed a plan that centers on reducing the role of government and empowering local advocates. The idea mirrors a common sentiment on the right, that government isn’t always the best way to address economic problems.

“This is what conservatives have been working on for years,” Ryan told the crowd. “We have been spending so much time on how to better solve these problems, how we can take our principles and apply them to problems to offer very good innovative solutions that are effective.”

Ryan added that lawmakers should make it easier for people to join the workforce. He argued that there are too many barriers that disincentivize people from getting a job. His ideal plan would be to move government into a role which supports local advocates instead of coming in to replace them.

“We cannot keep embracing this arrogant, paternalistic notion in Washington,” Ryan said. “We have to stop fighting this idea of poverty as some sterile, cold concept that we don’t like and then create some big bureaucracy and program in Washington and then parachute into communities and push them aside and say we know best.”

Ryan went on to say that the war on poverty may have been noble but the current approach has caused a stalemate. There are dozens of individual federal programs designed to fight poverty. The federal government spent $799 billion on these programs in 2012 alone.

The American Enterprise Institute, the U.S. Chamber of Commerce, the Manhattan Institute and other right-leaning organizations hosted the all-day conference. It included numerous speakers and panels to discuss ways to address poverty and economic mobility.

Advocates on the left have vastly different ideas on how to best fight poverty. They view government as a tool in which to better deploy resources and focus efforts. President Barack Obama has been an outspoken advocate for the poor and has invest billions of more dollars into federal efforts to reduce poverty.

Federal programs serve multiple purposes from providing food, housing and education. The Supplemental Nutrition Assistance Program (SNAP), for instance, received $78 billion in funding to fight hunger in 2012. The programs were meant to help reduce poverty but over the decades the problem has increased exponentially.

Ryan and other lawmakers may soon get the chance to implement their conservative approach. Republicans maintained their congressional control during the Nov. 8 election while also gaining the presidency. President-elect Donald Trump hasn’t spoken much on poverty but has echoed similar distrust of government programs.

Trump has focused more on helping people get and maintain their jobs. His campaign was built on a platform which sought to aid displaced workers. He hinted that he might increase work requirements for assistance programs. The government currently requires healthy adults without children to work in order to qualify for programs like food stamps. Sometimes the requirements are waived, such as after an economic downturn.

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Employers across multiple industries are facing a new type of union despite an earlier assurance it would not spread beyond the healthcare sector, according to a report Monday.

The National Labor Relations Board (NLRB) authorized the use of micro-unions in a decision from 2011. Micro-unions organize a subgroup of employees within a workplace as opposed to everyone. The U.S. Chamber of Commerce has found in a report that the board was wrong about micro-unions not spreading to other industries.

“The Board specifically denied that it had created new criteria for other industries,” the report stated. “Yet that assurance has proven to be false. In fact, the micro bargaining units enabled by Specialty Healthcare have surfaced in industries as varied as retail, manufacturing, rental cars, delivery services, and telecommunications.”

Specialty Healthcare & Rehabilitation Center was the employer at the center of the 2011 decision. Those opposed contested that the decision only served union interests by splitting up workplaces between union and nonunion. The NLRB assured critics that the decision would not spread beyond the healthcare industry.

“It did not take long for the reasoning behind Specialty Healthcare to spread from non-acute health care to additional industries,” the report said. “Within a few weeks of Specialty Healthcare, an NLRB Regional Director (RD) applied the new standard to a general aviation service business at the Teterboro, NJ, airport.”

General aviation service was just the first industry the new standard was able to spread to. Micro-unions eventually spread to retail, manufacturing, rental cars, delivery services and telecommunications. Unions traditionally had to get majority support from employees, but the new standard has allowed them to organize small fractions of workplaces instead.

“The attempt by the Board to implicitly sanction units reflective of little more than the extent to which unions had already recruited supportive workers was […] one of the most galling aspects of Specialty Healthcare,” the report argued. “In fact, such units are specifically outlawed.”

NLRB Member Brian Hayes was the only one of the five-person board that opposed the decision. He argued it was a dramatic change in policy and potentially violated existing law. The National Labor Relations Act (NLRA) prohibits bargaining units from being formed based solely on what the union can organize.

“This will in most instances encourage union organizing in units as small as possible,” Hayes wrote in his 2011 dissent. “[This is] in tension with, if not actually conflicting with, the statutory prohibition in Section 9(c)(5) against extent of organization as the controlling factor in determining appropriate units.”

Volkswagen was among several large companies that now has to deal with a micro-union. The United Auto Union (UAW) managed to organize a subgroup of 164 skilled workers at its manufacturing plant in Chattanooga, Tennessee. The UAW only started targeting the subgroup when it failed to unionize all 1,400 workers at the plant.

“The most significant implication of this situation is that unions will be able to cherry pick which groups of employees they want to organize, even if the majority of employees at a workplace do not in fact want union representation,” the report concluded.

Micro-unions have also formed at T-Mobile, Macy’s, Nestle Dreyer’s and other large employers. The report notes lawsuits against the decision have been unsuccessful, but it urges action by federal lawmakers or the courts to reverse the decision.

The NLRB stated that the decision speaks for itself, and the board had no further comment when asked by InsideSources.

A coalition of business groups launched a lawsuit Tuesday arguing the federal government exceeded its authority when implementing new overtime protections.

The Department of Labor (DOL) released a rule May 18 that expanded overtime to millions of more workers. The U.S. Chamber of Commerce and the International Franchise Association (IFA), among over fifty other groups, filed a lawsuit claiming the department ignored congressional intent when drafting the rule.

“We think the way they set that threshold reverses the way Congress intended the Department of Labor to define these exemptions,” Chamber Labor Policy Director Marc Freedman told InsideSources. “It’s literally a flipping of how this exemption definition is supposed to work.”

Managers and executives currently cannot qualify for overtime if they have a salary of at least $23,660. The new rule will increase the overtime salary exemption to $47,476 when it goes into effect Dec. 1. The lawsuit alleges that the Fair Labor Standards Act (FLSA) never intended the threshold to be increased so drastically and arbitrarily.

“The basic argument in our lawsuit is that the Department of Labor exceeded its FLSA-granted authority and ignored all past precedent in establishing the new salary exemption level at $47,476,” IFA Regulatory Affairs Vice President Michael Layman told InsideSources. “Further, it is also clear the DOL exceeded its authority in establishing a new automatic escalator, which will be incredibly disruptive to small businesses.”

The White House estimates the rule change will make an additional 4.2 million workers eligible for overtime. The administration has argued the updated rule will help restore overtime privileges that have dwindled for many workers over the decades.

“Over the past 40 years, overtime protections eroded as a result of inflation and lobbyists’ efforts to weaken them,” the White House said when the final rule was released. “This extra income will not only mean a better life for American families impacted by overtime protections, but will boost our economy across the board as these families spend their hard-earned wages.”

The White House adds the share of workers that qualifying for overtime has dropped significantly. Most full-time salaried workers, at 62 percent, qualified for overtime back in 1975. Now only 7 percent of those same type of workers qualify for overtime, according to the White House.

Freedman notes that in the past the threshold was tied to what workers that were performing managerial or other exempt tasks typically made. He adds that the new threshold creates its own line by increasing far beyond what those workers are currently making.

“It’s a lot more dramatic of a salary threshold than everything that has previously been established,” Freedman also noted. “This is why we believe the way they set the salary threshold is inconsistent. It’s certainly inconsistent with prior departments of labor and we think it’s inconsistent with congressional intent.”

The lawsuit also challenges the rule for including automatic increases. Freedman notes that automatic increases are dangerous because it doesn’t foresee economic downturns or other economic challenges business might face. The White House, however, argues its a needed provision.

“Additionally, this new level will be automatically updated every three years to ensure that workers continue to earn the pay they deserve,” the White House also stated.

President Barack Obama and his administration have worked extensively to change national labor law. They argue it’s to benefit workers, but opponents contest many of the new regulations will hurt workers and employers. The administration, however, has been able to overcome the legal challenges mounted against the new rules.

“We file these challenges as we feel necessary,” Freedman stated. “I think each reg and challenge needs to be taken on it own terms. I don’t think there’s any attempt to link them up and say well we weren’t successful here so we’re just not going to do this other one. It’s all about the strength of the argument and the specific regulatory issue.”

Additionally, a whole 21 states have filed a separate lawsuit against the overtime rule. Freedman notes there are some differences between the two arguments but that he wouldn’t be surprised if the business groups and states joined together in some way. Both challenges were filed in Texas.

Republican Sens. Lamar Alexander and Ron Johnson introduced legislation June 7 to block the rule before it goes into effect. Republicans have been at the forefront of opposing the rule, but even some Democrats are noting some concern.

The DOL did not respond to a request for comment by InsideSources.