Biden overtime pay rule challenged by US business groups
Will Biden's Overtime Rule Kill Jobs?
A coalition of U.S. business groups is suing to block a Biden administration rule that would make 4 million more workers eligible for overtime pay, arguing it exceeds the Department of Labor's authority and could force job cuts. The rule raises the salary threshold for overtime eligibility to about $58,600 annually. The business groups, including the National Federation of Independent Business and the National Retail Federation, filed their complaint in a Texas federal court.
What reasons did the coalition of U.S. business groups give for filing a lawsuit against the Biden administration's overtime rule?
The coalition of U.S. business groups filed a lawsuit against the Biden administration's overtime rule for several reasons. Firstly, they argue that the U.S. Department of Labor exceeded its authority by adopting the rule, which mandates that employers pay overtime to workers earning less than $1,128 per week (approximately $58,600 per year) when they work over 40 hours a week5. They claim this rule will impose significant financial burdens on businesses, particularly smaller employers and non-profits, which operate on fixed budgets4. The business groups contend that these financial strains will compel them to cut jobs and limit workers' hours, as well as reduce critical programming, staffing, and services to the public4. Additionally, they believe that the rule repeats the mistakes of a similar 2016 rule, which was previously blocked in court for setting the salary threshold too high, thereby including some management employees who traditionally are not eligible for overtime under federal wage law45.
How does the new salary threshold under the Biden rule compare to the threshold set by the Trump administration in 2020?
The new salary threshold under the Biden administration rule significantly increases the limit set by the Trump administration in 2020. Under the Trump rule, the overtime salary threshold was set at approximately $35,500 per year, which translates to about $684 per week. This threshold determined the salary limit below which workers were eligible for overtime pay when they worked more than 40 hours a week.
The Biden rule raises this threshold substantially. Starting July 1, the threshold will increase to $43,888 per year, and then on January 1, 2025, it will rise further to $58,656 per year, or about $1,128 per week136. This change marks a significant increase from the previous threshold, aiming to extend mandatory overtime pay to an additional 4 million workers, according to the rule's provisions.