A recent federal court ruling has struck down the Biden administration’s proposed overtime rule, a decision that impacts millions of salaried workers across the United States. This ruling echoes similar legal roadblocks faced by previous administrations, highlighting the ongoing debate surrounding the Department of Labor’s authority to regulate overtime eligibility.
The Proposed Rule: Expanding Overtime Eligibility
The Biden administration’s proposed overtime rule, announced earlier this year, sought to significantly increase the salary threshold for overtime eligibility under the Fair Labor Standards Act (FLSA). The new rule would have raised the salary cap to $43,888 as of July 2024, with a further increase to $58,656 by January 2025. This expansion aimed to cover an additional 4 million salaried workers, allowing them to receive overtime pay when working over 40 hours per week.
The Labor Department justified this rule as a necessary update, addressing decades of stagnation in wage protections. Acting Secretary of Labor Julie Su emphasized the administration’s commitment to closing wage gaps, stating, “It’s unacceptable for lower-paid salaried workers to do the same job as hourly counterparts without additional pay.”
Check out this TikTok explainer where I breaks down the recent developments and their implications.
The Court’s Ruling
However, U.S. District Judge Sean Jordan of Texas ruled that the Department of Labor exceeded its authority. Judge Jordan found that the proposed rule improperly prioritized salary levels over job duties, undermining the core intent of the FLSA. “The EAP exemption focuses on duties—not salary,” the ruling asserted, invalidating the proposed changes and reverting the salary threshold to the 2019 level of $35,568.
This decision aligns with a similar 2017 case where an Obama-era proposal to increase the overtime threshold to $47,000 was also blocked by the courts.
A Historical Challenge
Efforts to expand overtime protections have faced legal and political hurdles across multiple administrations. In 2016, the Obama administration proposed a comparable rule, only to see it struck down following challenges from business groups and Republican-led states. The Trump administration responded by implementing a more modest increase in 2019, which remains the current standard.
This latest court decision continues the pattern of legal challenges to significant wage threshold increases, particularly those perceived as imposing undue burdens on businesses.
Impacts Across Industries
The blocked rule had broad implications, particularly for industries such as retail, education, and healthcare. Many businesses expressed concerns about operational costs and the potential need to reduce employee hours to manage payroll budgets.
In higher education, for example, admissions officers, athletic staff, and student affairs professionals were among the employees poised to benefit from the expanded threshold. Steven Bloom, assistant vice president for Government Relations at the American Council on Education, noted that while reasonable increases are welcome, the rapid escalation proposed by the Biden administration was “potentially detrimental and highly disruptive.”
For additional perspectives, Fast Company and the National Law Review have explored the complexities of the court’s decision.
What’s Next?
With the incoming administration of President-elect Donald Trump, it appears unlikely that the Department of Labor will appeal the decision. Trump’s previous administration adopted a more restrained approach to wage threshold increases, and any new proposal under his leadership is expected to follow a similar trajectory.
For now, the previous threshold of $35,568 remains in effect, leaving millions of workers without the expanded overtime protections that were temporarily enacted earlier this year.
Looking Forward
The debate over overtime pay thresholds reflects larger tensions between worker rights and business flexibility. As industries adapt to evolving economic conditions, finding a balance that supports fair wages without destabilizing operations will remain a critical challenge. Employers and workers alike are encouraged to stay informed and seek guidance on navigating these legal and financial complexities.
If you are affected by these changes and need help navigating your options, consult a Labor and Employment Lawyer to understand your rights and next steps.