On Friday, a federal judge in Texas temporarily blocked the Biden administration’s overtime rule that would extend mandatory overtime pay to 4 million salaried U.S. workers, reported Reuters. The ruling only blocks the salary increase requirement for the state of Texas as an employer and does not impact private sector employers. A coalition of business groups, including NACS, filed a legal challenge to the rule in the Texas federal court.

U.S. District Judge Sean Jordan in Sherman, Texas, said the rule “improperly bases eligibility for overtime pay on workers' wages rather than their job duties.”

The U.S. Department of Labor (DOL) can seek review of the ruling in the New Orleans-based 5th U.S. Circuit Court of Appeals, “which is widely regarded as the most conservative federal appeals court,” wrote Reuters.

The first change in the federal overtime rule is set to go into effect today. Under the DOL’s recently released new overtime rule, any workers making less than $844 per week ($43,888 annualized) must be paid overtime wages for any hours worked in excess of 40 in any particular week, regardless of their job responsibilities. This marks an increase from the current threshold of $684 per week ($35,568 annualized) set by the DOL back in 2020.

NACS is still advocating for relief from the rule. It is also important to remember that, barring any intervention by the courts, this is just the first of two salary adjustments under the new rule, and the second will be significantly more dramatic. DOL chose to use the two-step process to try and insulate it from some legal challenges.

Starting on January 1, 2025, DOL will change the methodology via which they calculate this wage threshold away from what has been used for the past few decades. The result of this change will result in anyone making less than $1,128 per week ($58,656 annualized) being declared non-exempt. In fact, that threshold could end up higher due to inflation and other factors.