A Texas federal judge has ruled against the Biden administration’s new overtime pay rule, potentially reversing the eligibility of millions of salaried workers for overtime compensation. The decision, issued by U.S. District Judge Sean Jordan, halts a key provision of the Labor Department’s rule that would have increased the salary threshold for overtime eligibility to around $58,600 annually, beginning in 2025.
The rule, which sought to extend overtime benefits to an estimated 4 million workers earning under $1,128 per week, faced opposition from the state of Texas and business groups. The challengers argued that the rule improperly prioritized salary levels over the actual job duties that federal law mandates to determine overtime eligibility. Judge Jordan sided with these groups, asserting that the rule “substantially raised the salary level” without adhering to the legal framework surrounding job duties.
The Biden administration’s rule aimed to offer more salaried employees the chance to earn overtime pay by raising the salary threshold, a move that critics said would undermine businesses’ ability to provide other benefits to lower-level workers. In the wake of the ruling, the 2019 salary threshold of about $35,500 will be reinstated, marking a setback for the Labor Department’s push for broader wage protections.
While the Department of Labor may appeal the ruling to the 5th U.S. Circuit Court of Appeals, the future of the overtime rule remains uncertain. With a potential change in administration, the incoming leadership might not pursue the revival of the regulation, leaving the threshold in place for the foreseeable future.
