Biden overtime pay rule challenged by US business groups

A coalition of U.S. businesses has filed a suit to block the Biden Administration rule that would mandate overtime pay for 4 million employees, claiming it is too extreme.

The groups filed the complaint late Wednesday in Sherman, Texas Federal Court claiming that the U.S. Department of Labor did not have the authority to adopt the rule. They also claimed it would force employers to reduce jobs and workers’ hours.

Employers would be required to pay overtime premiums for workers earning less than $1128 per weekly, or $58,600 annually, who work more than forty hours per week.

The Trump administration set the current threshold at about $35,500 annually in a rule for 2020 that many Democrats and advocacy groups have said doesn’t cover enough workers.


According to the business groups involved in the lawsuit, the costs associated with complying with the rule will force smaller employers, non-profits, and those on fixed budgets, to reduce critical programming, staffing and services for the public.

The Labor Department declined comment. The agency adopted the rule because it said lower-paid employees often perform the same tasks as their hourly counterparts but work longer hours without receiving additional pay.

In the case, there are three groups: the National Federation of Independent Business (NFIB), the International Franchise Association (IFA) and the National Retail Federation.

The case was assigned by former Republican President Donald Trump to U.S. district judge Sean Jordan.

In 2017, the only other Sherman judge, U.S. district Judge Amos Mazzant blocked a rule which would have increased the threshold for overtime pay to approximately $47,000.

Mazzant stated that the cutoff is so high, it will sweep in many management employees who do not have overtime pay rights under federal wage laws.

The business groups claimed that the 2024 Overtime Rule of the Department repeats many of the mistakes made in the 2016 Rule, and does not address the flaws identified by the Court.

The salary threshold will rise to $43,888 at the beginning of July and to $58,656 by January 1, 2025, under the new rule. Starting in 2027 the threshold will increase automatically every three years in order to reflect changes in average earnings.