Biden’s overtime pay rule is being challenged by US business groups

Written by Danielle Wiesner

(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 four million workers, saying it goes too far.

The groups filed a complaint in Sherman federal court in Texas late Wednesday, alleging that the U.S. Department of Labor lacks the authority to adopt the rule, and that it would force companies to cut jobs and limit workers’ hours.

The rule requires employers to pay overtime premiums to workers who earn 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 per year was set by the Trump administration in a 2020 rule that advocacy groups and many Democrats said does not cover enough workers.

The costs of complying with the new rule “will force many small employers and nonprofits operating on fixed budgets to reduce critical programs, staffing, and services provided to the public,” the business groups said in the lawsuit.

The Ministry of Labor declined to comment. In adopting the rule, the agency said low-wage workers often do the same jobs as their hourly counterparts, but work longer hours without overtime pay.

Groups involved in the lawsuit include the National Federation of Independent Business, the International Franchise Association, and the National Retail Federation.

The case was referred to US District Judge Sean Jordan, appointed by former Republican President Donald Trump.

The only other judge in the Sherman case, U.S. District Judge Amos Mazzant, in 2017 dissented from a rule that would have raised the minimum overtime pay to about $47,000.

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Mazzant said the cap was so high that it would sweep away some department 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 fails to address the flaws previously identified by this court,” the business groups said in the lawsuit.

Under the new rule, the salary limit will rise to $43,888 on July 1 and to $58,656 on January 1, 2025. Starting in 2027, the limit will automatically increase every three years to reflect changes in average earnings.

(Reporting by Daniel Wiesner in Albany, New York; Editing by Kirsten Donovan, William MacLean)

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