Houston, Texas – A federal judge in Texas has issued a temporary halt on the implementation of the US Labor Department’s new overtime rule for the state. Judge Sean D. Jordan from the US District Court for the Eastern District of Texas granted Texas’ request for an injunction just before the rule was scheduled to take effect on July 1. Texas argued that the new rule would lead to increased payroll costs and negatively impact the state’s budget, potentially resulting in job losses for state employees and cuts to essential services.
The ruling by Judge Jordan comes as a victory for Texas, as it suspends the implementation of the overtime rule specifically for the state as an employer. This decision follows Texas’ claims that the new rule would be detrimental to its financial stability and operations.
The US Department of Labor had introduced the new overtime rule as a means to ensure fair compensation for low-earning workers. The rule, a significant policy win for the Biden administration, aimed to extend overtime pay protections to approximately 4 million workers who were previously ineligible.
Under the Fair Labor Standards Act, certain “white-collar” workers can be exempt from overtime pay requirements under specific conditions. The new rule proposed updating the salary threshold to automatically qualify workers making less than $58,656 annually for overtime pay when working more than 40 hours per week, with plans to adjust this threshold every three years.
The first phase of the rule, initially set for implementation on July 1, would have raised the salary threshold for overtime eligibility from $35,568 to $43,888. Subsequently, the threshold was planned to increase to $58,656 on January 1.
Texas’ legal challenge against the Department of Labor’s overtime rule has been combined with a case brought by a coalition of business groups in the Eastern District, as confirmed by Judge Jordan. Additionally, another legal dispute against the rule is pending in the Northern District of Texas.
The case, known as State of Texas v. DOL, highlights the ongoing debate and legal battles surrounding the implementation of the new overtime rule, emphasizing the complexities and implications for both employers and employees. As the situation continues to unfold in Texas federal courts, the future of the overtime rule and its potential impact remains uncertain.