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Judge Strikes Down Overtime Expansion

Judge Strikes Down Overtime Expansion

A Texas judge issued a ruling today invalidating the entirety of the Department of Labor’s (DOL) overtime final rule, which would have extended overtime pay to an estimated 4 million workers.

Judge Sean D. Jordan of the U.S. District Court for the Eastern District of Texas says in the opinion that, while the DOL has the authority to define and delimit the terms of the overtime exemption, “that authority ‘is not unbounded.’” The judge found that the department exceeded its statutory authority because “the minimum salary level imposed by the 2024 rule ‘effectively eliminates’ consideration of whether an employee performs ‘bona fide executive, administrative, or professional capacity’ duties in favor of what amounts to a salary-only test.”  The judge also found that the DOL’s automatic updates to the minimum salary threshold every three years “violates the notice-and-comment rulemaking requirements of the [Administrative Procedure Act].”

Based on the decision, the minimum salary threshold returns to $35,568, and the threshold for highly compensated employees is back to $107,432. The first phase of the overtime rule increased on July 1 the salary threshold for overtime eligibility to $43,888. This number was slated to increase to $58,656 on January 1. The judge initially had stayed the overtime rule only in Texas, but the decision striking down the rule applies nationwide.
 
The DOL may appeal the decision, but it is expected that the department under the new Trump administration will abandon its defense of the overtime rule.