A federal judge in Texas on Friday permanently blocked a regulation proposed by the Biden administration that would have made approximately 4 million salaried workers in the United States eligible for overtime pay.
According to Reuters, Sean Jordan, a federal judge for the U.S. District Court in Sherman, Texas, deemed the rule, which went into effect in July by the Department of Labor, inappropriate. He stated that it based eligibility for overtime pay on wages rather than job responsibilities.
The Texas government and many industry trade groups filed lawsuits questioning the regulation, and these lawsuits have since been consolidated.
Jordan, a federal judge appointed by former President Trump during his first term, had previously expressed doubts about the validity of the rule back in June, temporarily halting its application to Texas employees. On Friday, he ultimately struck down the regulation.
The regulation required employers to pay overtime to certain salaried workers engaged in managerial, administrative, or professional roles, working more than 40 hours per week and earning an annual salary below approximately $58,600. Starting from January 1, 2025, the salary threshold for eligible salaried workers to receive overtime pay would have been below about $58,600 (or a weekly salary of $1,128).
Judge Jordan’s ruling means that the income threshold of approximately $35,500 set by the Trump administration in 2019, which required employers to pay overtime, will soon be reinstated.
Both the U.S. Department of Labor and the office of Texas Attorney General Ken Paxton, a Republican, did not immediately respond to Reuters’ request for comments.
One of the groups involved in filing the lawsuit was the National Retail Federation (NRF). David French, its executive vice president, said that the regulation would weaken retailers’ ability to provide more benefits to low-wage employees.
The U.S. Department of Labor can appeal this ruling to the U.S. Fifth Circuit Court of Appeals in New Orleans, known as one of the most conservative federal appellate courts. However, the incoming Trump administration may choose not to pursue any attempts to reinstate this rule.
Federal law excludes workers engaged in administrative, managerial, and professional roles from overtime pay requirements, while the Department of Labor has long considered wages as a factor in determining when overtime pay rules apply.
When implementing the regulation, the Department of Labor stated that low-wage workers often perform the same tasks as hourly workers, but work longer hours without additional compensation. The rule also specified that the wage threshold for overtime eligibility would automatically increase every three years to reflect wage growth.
Judge Jordan, in his ruling on Friday, agreed with the views of the Texas government and industry groups that the Department of Labor rule significantly raised the wage level at which overtime pay could be received, inappropriately abandoning the requirement on job responsibilities written into federal law.
In the ruling order, Judge Jordan wrote that while the Department of Labor can impose some limitations when implementing the provision exempting workers engaged in administrative, managerial, and professional roles from overtime pay, it cannot promulgate rules to replace or undermine the meaning of these provisions.