A federal judge in Texas has ruled against a Biden administration rule that would have increased the number of salaried workers eligible for overtime pay.
Just The News reported that a Texas court overturned a Biden administration labor rule set to expand overtime pay eligibility, affecting millions of workers.
The Biden administration had proposed a rule through the Department of Labor to extend overtime pay to more salaried workers.
This rule aimed to raise the salary threshold under which employees are eligible for overtime pay when they work more than 40 hours a week.
According to the now-rejected rule, salaried workers earning up to $58,600 annually would qualify for overtime. This was a significant rise from the previous cap set in 2019, which was $35,500 annually.
The proposed changes were meant to take effect starting January 1, 2025, but with the recent legal decision, the threshold will revert to the 2019 standards. This turn of events has stopped a major alteration in payroll calculations for employers nationwide.
U.S. District Judge Sean Jordan, who delivered the ruling, was appointed during former President Donald Trump’s tenure. His decision was grounded in the belief that the Department of Labor had overstepped its statutory limits with the proposed rule.
Judge Jordan’s opinion was that the rule overly prioritized salary levels in determining overtime eligibility, disregarding the nature of the employee's job duties.
He stated, "The Department’s changes to the minimum salary level in the 2024 Rule exceed its statutory jurisdiction," highlighting a departure from considering whether employees perform executive, administrative, or professional duties.
The judge further remarked, “The minimum salary level imposed by the 2024 Rule 'effectively eliminates' consideration of whether an employee performs 'bona fide executive, administrative, or professional capacity' duties, in favor of what amounts to a salary-only test.” This aspect of his ruling emphasized the imbalanced focus on salary over job role criteria.
Opponents of the rule, including a variety of employers, argued that such a rise in the salary threshold for overtime eligibility would lead to significantly higher payroll costs. They contended that adjusting to these costs could force businesses to cut jobs or reduce shifts, potentially harming the very workers the rule aimed to help.
Moreover, the ruling affects employers and employees across the United States as it holds nationwide effect.
Without the implementation of this rule, many salaried workers earning between the two thresholds will not be eligible for overtime compensation despite working extended hours.
This decision is pivotal as it does not merely affect the involved legal parties but potentially millions of salaried employees across various sectors. These employees might have anticipated a change in their pay structures starting in 2025 that now will not come to pass.
The dismissal of the rule preserves the status quo, which has been in place since the last update in 2019. This means that the legal threshold for overtime eligibility remains at $35,500 for now, a figure that consumer price index adjustments have long outpaced.
While the court's decision is seen as a victory by those advocating for less regulatory burden on businesses, it has been met with disappointment by labor advocates who were hopeful for an expansion of worker benefits through increased overtime coverage.
The reaction to the court's decision encapsulates a broader debate between economic policy and workers' rights, underscoring the complex interplay of labor laws, business economics, and employee compensation in America.
This pivotal ruling not only halts significant changes in overtime pay eligibility but also sparks a continued debate on the balance between regulatory impact and economic growth.