US judge skeptical of Biden overtime pay rule

By Daniel Wiessner

(Reuters) - A federal judge in Texas on Monday seemed likely to stop a Biden administration rule that would extend mandatory overtime pay to 4 million U.S. workers from taking effect, but was unsure whether he could block it nationwide or only in the Republican-led state.

U.S. District Judge Sean Jordan in Sherman, Texas, suggested during a hearing that the U.S. Department of Labor had flouted federal wage law by basing eligibility for overtime pay on salaried workers' wages rather than their job duties.

Jordan, an appointee of Republican former President Donald Trump, is considering a motion by Republican Texas Attorney General Ken Paxton's office to stop the rule from taking effect on July 1 pending the outcome of the state's lawsuit.

The rule will require employers to pay overtime premiums to salaried workers who earn less than $1,128 per week, or about $58,600 per year, when they work more than 40 hours in a week. The current threshold, set in 2019, is about $35,500.

Federal law exempts workers with "executive, administrative, and professional" duties from receiving overtime pay, and the Labor Department has for decades used salary as one factor in deciding when that applies.

During Monday's nearly 90-minute hearing, Jordan suggested that the new rule raises the threshold so significantly that it renders workers' duties irrelevant even though they are the primary focus of the law.

“Not every case can be decided by salary, and you can have people who are not earning a particular salary you might expect who otherwise meet the exemption,” the judge said.

Brian Rosen-Schaud, a U.S. Department of Justice lawyer, told Jordan that the Labor Department would continue to look at workers' duties in tandem with their wages.

“But if you meet the salary, you don’t even get to the duties test,” Jordan replied.

The judge seemed less certain about whether he should block the rule nationwide or only bar the Labor Department from applying it to state employees in Texas, asking both sides for input on the issue. Jordan is also presiding over a challenge to the rule by business groups, and a small marketing firm is suing over the regulation in a different federal court in Texas.

Garrett Greene, a lawyer for Texas, urged Jordan to stop the rule from taking effect anywhere, saying a federal law that regulates agency rulemaking gives courts the power to do so.

(Reporting by Daniel Wiessner in Albany, New York; Editing by Alexia Garamfalvi and Stephen Coates)