In a move that underscores ongoing debates about worker compensation, the U.S. Department of Labor (DOL) has recently appealed a pivotal decision by Judge Sean Jordan of the U.S. District Court for the Eastern District of Texas. The judge had ruled against the DOL’s latest final rule aimed at expanding overtime pay eligibility under the Fair Labor Standards Act (FLSA). This rule intended to increase the number of American workers eligible for overtime pay by raising the salary threshold requirements. However, the judge found that the rule exceeded the DOL’s authority and was unlawful, leading to the reinstatement of the earlier minimum threshold of $35,568 for employees to be classified as overtime exempt.
Appeal Heading to the 5th U.S. Circuit Court of Appeals
The appeal will be reviewed by the 5th U.S. Circuit Court of Appeals, which has a history of supporting the DOL’s ability to include a salary level when determining overtime eligibility. However, the court has also cautioned against creating rules that undermine or replace the FLSA’s exemption criteria. This decision’s context is shaped by recent political changes, including the election of President Donald Trump, whose past actions suggest he may not favor retaining the new overtime rule.
Background and Implications of Previous Regulations
The article highlights key points about the implications of past regulations, such as the 2019 overtime rule under Trump, which expanded eligibility to approximately 1.2 million workers, echoing earlier changes in 2004. In contrast, the new 2024 rule proposed by the Biden administration aimed to introduce changes within a five-year span without any federal minimum wage increase, a first in 85 years. These differences formed the basis for Judge Jordan’s ruling.
Kantor Method and Salary Threshold Concerns
Judge Jordan also cited the Kantor Method, a principle from 1958, which asserts that a minimum salary threshold should not render more than 10% of employees—who qualify as exempt based on duties alone—as nonexempt. However, according to Jordan’s analysis, the 2024 rule would have disqualified a significantly higher percentage of employees from exemption status.
Issues with Automatic Updates
The judge further expressed concern about the second phase of the 2024 rule, which would introduce a new methodology for calculating the minimum salary threshold in January 2025 and implement automatic updates every three years. Jordan opined that such automatic updates would delegate too much authority outside the DOL’s intended role and violate the notice-and-comment requirements of the Administrative Procedure Act.
Prospects for the Overtime Rule
The debate on worker compensation continues as the U.S. Department of Labor (DOL) recently contested a significant ruling by Judge Sean Jordan of the U.S. District Court for the Eastern District of Texas. The judge had declared against the DOL’s latest rule aimed at broadening eligibility for overtime pay under the Fair Labor Standards Act (FLSA). The proposed rule sought to increase the number of American workers eligible for overtime by raising the salary threshold requirements. However, Judge Jordan found that the rule exceeded the DOL’s authority and deemed it unlawful. Consequently, the previous minimum threshold of $35,568 for employees to be classified as overtime exempt was reinstated. This appeal by the DOL underscores the complexity of ensuring fair worker compensation and the delicate balance between regulatory authority and judicial oversight. As this case continues, it raises questions about the future of wage policy and worker rights in the United States.