By Daniel Wiessner
(Reuters) – A coalition of U.S. business groups has filed a lawsuit to block a Biden administration rule that would expand mandatory overtime pay to 4 million workers, saying it goes too far.
The groups filed a complaint late Wednesday in federal court in Sherman, Texas, claiming 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 working hours .
The rule would require employers to pay overtime premiums to employees who earn wages of less than $1,128 per week, or about $58,600 per year, when they work more than 40 hours per week.
The current threshold of about $35,500 per year was set by the Trump administration in a 2020 rule, which advocacy groups and many Democrats say does not cover enough workers.
The business groups in the lawsuit said the costs of complying with the new rule “will force many smaller employers and nonprofits that operate on fixed budgets to cut back on critical programming, staffing and services to the public.”
The Ministry of Labor declined to comment. In adopting the rule, the agency said lower-wage workers often do the same work as their hourly counterparts but work longer hours without additional pay.
The groups involved in the lawsuit 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, an appointee of Republican former President Donald Trump.
The only other judge in Sherman, U.S. District Judge Amos Mazzant, blocked a rule in 2017 that would have raised the salary threshold for overtime to about $47,000.
Mazzant said the limit was so high that it would affect some management employees who are not entitled to overtime under federal wage law.
“The Department’s 2024 overtime rule largely repeats the errors of the 2016 rule and fails to address the deficiencies previously identified by this court,” the business groups said in their lawsuit.
Under the new rule, the salary threshold will increase to $43,888 on July 1 and to $58,656 on January 1, 2025. And starting in 2027, the threshold will automatically increase every three years to reflect changes in average earnings.
(Reporting by Daniel Wiessner in Albany, New York; Editing by Kirsten Donovan, William Maclean)
