Overtime Pay Rule Struck Down By Federal Judge In Texas

U.S. District Judge Sean Jordan in Sherman, Texas, has declared that the overtime rule that officially took effect in July improperly determined workers’ eligibility and has thus blocked the rule.

• Issued by the Department of Labor under the Biden administration, the rule would have made an additional 4 million salaried workers eligible to receive overtime pay.
• It was conceived largely to avoid situations where certain salaried workers who are doing the similar work as hourly workers end up working more hours for no additional pay.
  
  

The rule had been enacted last July by raising the annual threshold for overtime to the equivalent of a $43,888 annual salary, and the rule was set to raise that threshold to $58,656 on January 1, 2025. Now, with the rule overturned, the threshold will return to the previously established $35,568.

The rule had also established that, starting in 2027, the salary thresholds would update every three years applying up-to-date data to determine new salary levels. Such plans are no longer applicable.

• The federal judge had heard the case as a result of a consolidated lawsuit challenging the rule, which was filed by the state of Texas and business groups representing various industries.
  
  

Judge Jordan, who was appointed by Donald Trump during his first term in office, ruled that the rule improperly bases eligibility for overtime pay on workers’ wages. The eligibility, he says, should be based on job duties.

Is This Rule Officially Dead?

Promo companies previously had to review the rule in order to ensure they were compliant, but they no longer have to consider the previously planned raise to annual salary threshold for overtime pay in January.

Whether Judge Jordan’s ruling is a death knell to the Department of Labor’s overtime rule is still to be determined. The Labor Department has the option to seek review of the ruling in the 5^th U.S. Circuit Court of Appeals. However, it is possible that the incoming Trump administration would have no interest in bringing back to life a rule that was enacted by his predecessor.