U.S. judge strikes down overtime pay rule
Retail industry groups applauded a ruling by the U.S. District Court in the Eastern District of Texas that struck down the Department of Labor’s final overtime rule.
The court found that the Biden-Harris Labor Department’s 2024 overtime rule’s July 1, 2024, increase was unlawful as well as the scheduled Jan. 1, 2025, increase. The rule would have increased the minimum annual salary threshold that determines overtime pay eligibility under the Fair Labor Standards Act.
DOL’s final rule increased the minimum annual salary level threshold for exemption to $43,888 on July 1, and on Jan. 1, it was scheduled to increase to $58,656. In addition, salary thresholds would have been updated every three years starting on July 1, 2027. With the decision overturn the rule, the minimum salary threshold is once again set to $35,568, and the threshold for highly compensated employees is set to $107,432.
“NRF appreciates the Court concurring with our arguments that the Labor Department exceeded its legal authority in promulgating rules clearly inconsistent with the Fair Labor Standards Act,” stated David French, executive VP of government relations, National Retail Federation. “The rules, if finalized, would have curtailed retailers’ ability to offer the most flexible, generous and tailored benefits packages to lower-level exempt employees across the industry.”
French added that NRF opposed the rules from the outset.
“They would have forced employers to reexamine compensation packages for millions of workers nationwide,” he said. “Had the rule taken effect, some workers would have lost the status of a managerial position, valuable educational and training experiences, the capability to travel on the employer’s behalf, and/or flexibility as to when, how and where they work."
The Retail Industry Leaders Association also praised the decision.
“Retailers are relieved with the court’s decision to block the DOL’s final overtime rule, which was an overzealous and unreasonable approach from the start that ignored the realities of today’s economy and the law,” said Evan Armstrong, RILA’s VP of workforce policy. RILA has long argued the DOL’s approach to overtime policy would create uncertainty for employers. The court recognized rightly that the rule was legally dubious and ultimately created an unworkable standard.”
Added Armstrong: “We look forward to collaborating with the department in the future to craft a more practical proposal.”