A judge in the Texas Eastern District Court has struck down the Department of Labor’s final overtime pay rule, which would have expanded overtime pay incrementally to $58,656 in 2025. The Biden-era overtime rule was set to affect nearly 4 million U.S. salaried workers and was already raised to $44,000 per year when it went into effect on July 1.
According to U.S. District Judge Sean Jordan — who was appointed by President Elect Donald Trump during his first term as president — the overtime rule is invalid because it improperly bases employees’ eligibility on their wages instead of their job duties. Now, instead of being raised again in 2025, the overtime pay threshold will go back down to pre-pandemic levels of $35,568.
The overtime rule was controversial when it originally passed earlier this year, with experts predicting that it employers will struggle to keep up financially with such a major change, much like other controversial fast-moving wage legislation like California’s $20 minimum wage for fast food workers.
Much of the hospitality industry has approved of the rule being overturned.
“Small businesses can breathe a sigh of relief that this unworkable rule has been overturned,” Michael Layman, the chief advocacy officer with the International Franchise Association, said in a statement. “We applaud the court’s action, which will have the effect of protecting jobs and providing more certainty for franchise owners to operate. The rule would have forced employers to reduce hours, demote many salaried workers to hourly, and cut jobs to manage costs.”
The final ruling was due in large part to a lawsuit filed by the Restaurant Law Center and Texas Restaurant Association. Has the ruling not occurred, the incoming presidential administration likely would have overturned it, experts say.
“The Texas Restaurant Association is proud to deliver another win for not only restaurants, but all businesses across the U.S. thanks to a lawsuit that we filed in federal court in Texas with our partners at the Restaurant Law Center challenging the DOL’s invalid overtime thresholds rule,” Dr. Emily Williams Knight, CEO of the Texas Restaurant Association, said in a statement. “This ruling creates some much-needed regulatory certainty, helping small businesses in particular refocus on serving their customers and employees as we enter an important holiday season.”
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