By Daniel Wiessner
(Reuters) – A coalition of U.S. business groups has filed a lawsuit aimed at blocking a Biden administration rule that would extend mandatory overtime pay to 4 million workers, saying it goes too far.
The groups filed a lawsuit in federal court in Sherman, Texas, on Wednesday evening, saying the U.S. Department of Labor lacked the authority to adopt the rule and that it would force companies to cut jobs and limit workers’ working hours.
The Sherman court has two judges, one of whom in 2017 struck down a similar rule adopted by the Obama administration.
The rule would require employers to pay overtime premiums to workers who earn wages below $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 a year was set by the Trump administration in a 2020 rule that advocacy groups and many Democrats say does not cover enough workers.
The business groups involved in the lawsuit said the costs of complying with the new rule “will force many small employers and nonprofits operating on fixed budgets to reduce their programs, staffing levels and essential services to the audience”.
The Labor Department did not immediately respond to a request for comment. Groups involved in the lawsuit include the National Federation of Independent Business, the International Franchise Association and the National Retail Federation.
The case could go to U.S. District Judge Amos Mazzant, appointed by former Democratic President Barack Obama, who blocked a rule in 2017 that would have raised the overtime pay threshold to about $47,000.
The judge said the threshold was so high that it would result in the admission of some managerial employees who are not entitled to overtime pay under federal wage law.
“The Department’s 2024 Overtime Rule largely repeats the errors of the 2016 Rule and fails to remedy the flaws previously identified by this Court,” the business groups said in their lawsuit.
The groups in a court filing accompanying the complaint said it was linked to the Obama-era case and called for it to be attributed to Mazzant.
The other Sherman-based judge, U.S. District Judge Sean Jordan, was appointed by former Republican President Donald Trump.
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)
