Texas wins court block on Biden overtime pay rule

A construction worker helps repave a road during a period of hot weather in Houston, Texas, U.S. June 27, 2023. REUTERS/Callaghan O’Hare/File photo

By Daniel Wiessner

(Reuters) -A federal judge in Texas on Friday temporarily blocked a Biden administration rule from taking effect that would extend mandatory overtime pay to 4 million salaried U.S. workers.

U.S. District Judge Sean Jordan in Sherman, Texas, said the U.S. Department of Labor rule that is set to go into effect on Monday improperly bases eligibility for overtime pay on workers' wages rather than their job duties.

Jordan, an appointee of Republican former President Donald Trump, blocked the Labor Department from applying the rule to state workers in Texas pending the outcome of a legal challenge by the Republican-led state.

The Labor Department and the office of Republican Texas Attorney General Ken Paxton did not immediately respond to requests for comment.

The department can seek review of the ruling in the New Orleans-based 5th U.S. Circuit Court of Appeals, which is widely regarded as the most conservative federal appeals court.

The rule adopted in April would require employers to pay overtime premiums to salaried workers who earn less than $1,128 per week, or about $58,600 per year, when they work more than 40 hours in a week. The current threshold of about $35,500 was set in 2019.

Federal law exempts workers with "executive, administrative, and professional" (EAP) duties from receiving overtime pay, and the Labor Department has for decades used salary as one factor in deciding when that applies.

In adopting the rule, the department said that lower-paid salaried workers often do the same jobs as their hourly counterparts, but work more hours for no additional pay.

The rule also establishes automatic increases in the salary threshold every three years to reflect wage growth.

Texas in its lawsuit said the rule violates federal law by conditioning overtime exemptions primarily on workers' pay rather than their duties, and is seeking to strike it down nationwide.

Texas says that subjecting states to the overtime expansion violates their right under the U.S. Constitution to structure the pay of state employees and, in turn, decide how to allocate large portions of their budgets.

Jordan on Friday agreed that the Labor Department had overstepped its authority by effectively rewriting federal law.

"Since the ordinary meaning of the EAP Exemption focuses solely on duties, any rule implementing the EAP Exemption - including the 2024 Rule — must likewise center on duties," the judge wrote.

Jordan is also presiding over a challenge to the rule by business groups, and a small marketing firm is suing over the regulation in a different federal court in Texas.

(Reporting by Daniel Wiessner in Albany, New York; Editing by Sandra Maler and Daniel Wallis)