News
Biden overtime pay rule challenged by US business groups
By Daniel Wiessner
(Reuters) -A coalition of U.S. business groups has filed a lawsuit seeking to block a Biden administration rule that would extend mandatory overtime pay to 4 million workers, saying it goes too far.
The groups filed a complaint in federal court in Sherman, Texas, on Wednesday night, alleging that the U.S. Department of Labor did not have the power to adopt the rule and that it would force companies to cut jobs and limit workers’ hours.
The rule would require employers to pay overtime premiums to workers earning less than $1,128 a week, or about $58,600 a year, when they work more than 40 hours a week.
The current limit of about $35,500 a year was set by the Trump administration in a 2020 rule that advocacy groups and many Democrats said did not cover enough workers.
Business groups involved in the lawsuit said the costs of complying with the new rule “will force many smaller employers and nonprofits operating on fixed budgets to cut critical programs, staffing and services to the public.”
The Labor Department declined to comment. In adopting the rule, the agency stated that lower-wage workers often do the same jobs as their hourly counterparts, but work longer hours without any additional pay.
Groups involved in the process include the National Federation of Independent Business, the International Franchise Association and the National Retail Federation.
The case was assigned to U.S. District Judge Sean Jordan, appointed by former Republican President Donald Trump.
The only other judge in Sherman, U.S. District Judge Amos Mazzant, in 2017 blocked a rule that would have raised the overtime wage threshold to about $47,000.
Mazzant said the cut was so high that it would cover some administrative employees who are not entitled to overtime pay under federal wage law.
“The Department’s 2024 Overtime Rule largely repeats the errors of the 2016 Rule and does not address the flaws previously identified by this Court,” the business groups said in their filing.
Under the new rule, the salary cap will increase to $43,888 on July 1 and to $58,656 on January 1, 2025. And starting in 2027, the cap will automatically increase every three years to reflect changes in average income.
(Reporting by Daniel Wiessner in Albany, New York; Editing by Kirsten Donovan, William Maclean)