A Texas federal court has halted a Biden administration initiative aimed at broadening overtime pay to millions more workers, delivering a significant blow to labor reform efforts.
The New York Post reported that Judge Sean Jordan's ruling stops the application of new wage-based overtime rules proposed to start in 2025. The controversy began with a rule introduced by the Department of Labor under President Joe Biden, which took effect this past July.
It was designed to extend overtime pay protections to about 4 million additional salaried employees in the United States by adjusting the income thresholds that determine eligibility.
However, this new criterion shifted focus from the nature of a worker's job duties to their earnings, setting a salary cap of $58,600 annually for overtime eligibility.
The rule was set to enforce that any salaried worker making less than $1,128 per week would qualify for overtime pay if they worked more than 40 hours a week.
The state of Texas, along with various business interest groups, quickly challenged the rule in court. They argued that the change prioritized wages over the established method of assessing job responsibilities, which traditionally governed overtime qualifications.
Before the permanent injunction was issued, Judge Jordan, who was appointed by then-President Donald Trump, had already expressed skepticism about the legality of the rule. In June, he granted a temporary injunction that specifically prevented the rule's application to state employees in Texas.
The consolidated lawsuit brought by Texas and the business groups culminated in Judge Jordan's recent decision, which has effectively nullified the rule's implementation nationwide.
This decision preserves the previous salary threshold for overtime eligibility, set at about $35,500 annually, established in 2019.
David French, a senior vice president at the National Retail Federation, commented on the impact of the now-blocked rule.
He indicated that it would have limited the ability of retailers to extend better benefits to their lower-level salaried staff.
"The rule would have curtailed retailers’ ability to offer greater benefits to lower-level salaried employees," said French, highlighting the business community's relief at the court's decision.
In his ruling, Judge Jordan emphasized that while the Department of Labor holds some authority to define and limit the terms of exemptions from overtime, it cannot replace or undermine the intrinsic meanings of those terms.
The Labor Department has the option to appeal Judge Jordan's decision to the 5th US Circuit Court of Appeals in New Orleans, a court known for its conservative leanings.
Alternatively, the incoming administration under President Trump, who will soon begin his second term, might decide not to continue advocating for the rule's implementation.
At the time of this reporting, neither the Labor Department nor the office of Texas Attorney General Ken Paxton had provided comments on the ruling.
The original overtime rule also included provisions for automatic adjustments to the salary threshold every three years, based on wage growth. This aspect was intended to ensure the threshold kept pace with economic changes, but it has now been stalled by the court's decision.
The ongoing legal and political debate over this rule reflects broader national conflicts over wage policies and workers' rights in an evolving economic landscape.
