Federal Judge Blocks Biden Administration Overtime Rule, Citing Legal Overreach

On Friday, a Texas federal judge permanently blocked a Biden administration rule that sought to extend overtime pay eligibility to approximately 4 million additional salaried workers, finding that the regulation improperly emphasized wages over job duties.

U.S. District Judge Sean Jordan ruled that the U.S. Department of Labor (DOL) exceeded its authority by tying overtime eligibility primarily to salary levels rather than focusing on the nature of workers’ duties, as federal law requires. The decision strikes down the rule, which temporarily raised the salary threshold to $44,000 annually on July 1 and would have raised it further to $58,600 by January 1, 2025.

With the ruling, the previous threshold of $35,500, established in 2019, will remain in effect.

The overtime rule, part of President Biden’s labor agenda, aimed to provide overtime pay to salaried workers earning less than the proposed thresholds. The DOL argued that many lower-paid salaried employees perform similar tasks to hourly workers yet work additional hours without extra compensation.

The rule also included automatic salary threshold adjustments every three years to account for wage growth.

However, Texas and business groups, including the National Retail Federation (NRF), sued to block the regulation, arguing it imposed undue burdens on employers and exceeded the DOL’s statutory authority under the Fair Labor Standards Act (FLSA).

Judge Jordan, a Trump appointee, agreed with the challengers, ruling that the regulation unlawfully elevated salary considerations over the statutory duties test for overtime exemptions. Federal law exempts employees with "executive, administrative, and professional" (EAP) duties from overtime pay requirements, and the DOL has historically used salary as one factor to determine whether a worker falls into this category.

"The Department may impose some limitations on the scope of the EAP Exemption’s operative terms, but it cannot enact rules that replace or swallow the meaning those terms have," Jordan wrote in his decision.

The judge’s ruling echoed his earlier June opinion, temporarily blocking the rule as it was applied to Texas state employees.

David French, executive vice president of the NRF, praised the ruling, saying the blocked rule would have restricted retailers’ ability to offer benefits to lower-level salaried employees.

The Labor Department and the Texas Attorney General’s office, led by Republican Ken Paxton, did not immediately comment on the ruling.

The Labor Department can appeal the decision to the 5th U.S. Circuit Court of Appeals, considered one of the most conservative appellate courts in the nation. However, with the Trump administration set to take office in January, it is possible the incoming administration could abandon efforts to revive the rule.