Business Groups Challenge Biden Admin Overtime Rule in Federal Court

In an effort to block a Biden administration rule from being implemented, a coalition of U.S. business groups has filed a lawsuit in federal court in Sherman, Texas. The groups argue that the U.S. Department of Labor does not have the authority to implement the rule and that it will result in job cuts and reduced hours for workers.

The proposed rule would require employers to pay overtime premiums to workers who earn less than $1,128 per week, or around $58,600 per year, when they work more than 40 hours in a week. This threshold is higher than the current one of about $35,500 per year, which was established by the Trump administration in 2020. Advocacy groups and many Democrats have criticized this threshold as inadequate.

The business groups behind the lawsuit argue that complying with the new rule would lead to many smaller employers and non-profits with fixed budgets having to make cuts to critical programs, staffing, and services. They believe that the rule would place an undue burden on businesses, especially those with limited financial resources.

The Department of Labor did not offer a comment on the lawsuit. The agency has defended the rule by highlighting that lower-paid salaried workers often perform the same tasks as hourly employees but work longer hours without extra pay. The groups involved in the lawsuit include the National Federation of Independent Business, the International Franchise Association, and the National Retail Federation.

Under the proposed rule, the salary threshold would gradually increase to $58,656 by January 2025, with automatic adjustments every three years thereafter to account for changes in average earnings. The lawsuit is ongoing, and the outcome will have significant implications for millions of American workers and businesses.

Advocates for workers’ rights have criticized this new threshold as still being too low for many employees who need overtime pay to make ends meet. They argue that this could lead to continued exploitation of low-wage workers who are forced to work long hours without extra pay.

The case was assigned to U.S. District Judge Sean Jordan, who was appointed by former President Donald Trump