WASHINGTON — A recent federal court decision in Texas has nullified a Biden administration regulation intended to broaden overtime pay for approximately four million salaried employees, including numerous workers at higher education institutions. The rule, which was struck down just weeks before its second phase was poised to be enacted, had sought to increase the salary threshold for overtime eligibility, sparking a heated debate over its potential impacts on jobs and educational costs.
District Judge Sean D. Jordan, a Trump appointee, ruled against the regulation, thereby reverting the overtime salary threshold to $35,568, down from the current limit of $43,888 established in July. The new regulation, which was set to take effect in July 2024, would have raised the threshold further to $58,656. The administration had argued this adjustment was crucial to ensure equitable compensation for lower-wage workers.
Higher education bodies had previously expressed concerns that the swift changes proposed by the administration could severely disrupt operations, potentially leading to tuition hikes or job cuts. Initial estimates indicated that nearly 59,000 employees across 882 educational institutions would have benefited from the planned changes. These figures encompassed various campus roles such as admissions officers, counselors, student affairs personnel, and athletic staff, although faculty and coaches would not have been affected.
The ruling forms part of a broader pattern of judicial setbacks for the Biden administration, with similar obstructions impacting policies related to student loans, debt relief, and extended antidiscrimination safeguards for transgender students. Critics of the overtime rule, including the state of Texas and various business consortiums, argued that the increased payroll expenses necessitated by the rule could lead to reduced employment and fewer work hours available.
Judge Jordan’s decision emphasized that the rule’s high salary threshold diluted the importance of assessing whether an employee’s duties were of an “executive, administrative, or professional” nature, effectively reducing the criteria to a salary-only test. This interpretation aligns with a similar judgment that blocked an attempt by the Obama administration in 2017 to raise the salary threshold significantly. Conversely, a revision by the Trump administration in 2019 successfully raised the threshold to its current level.
In response to the ruling, Representative Virginia Foxx, a North Carolina Republican and chair of the House Education Committee, lauded the court’s decision. She criticized the Biden administration for persistent governmental overreach and for imposing what she termed as burdensome compliance costs on employers, which she argued undermined the U.S. economy.
As the Biden administration contemplates an appeal to the U.S. Court of Appeals for the Fifth Circuit, the future of overtime pay regulations remains uncertain. The case highlights ongoing tensions between efforts to enhance worker compensation and concerns regarding economic and employment impacts.
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