Texas Challenges New Overtime Rule

The U.S. Department of Labor’s (DOL) new ruling to extend overtime protections—set to take effect on July 1—is being challenged in three Texas district courts. On June 3, two separate lawsuits filed by the same software company and in May by the state of Texas charge the DOL lacks the authority to make the change, according to Bloomberg Law.

The lawsuits hope to halt a final ruling announced in April that raises the minimum salary threshold to qualify for time-and-a-half pay after 40 hours of work in a week. Starting July 1, workers earning less than US$43,888 per year, or $844 per week, would be eligible for overtime pay. By January 1, 2025, the salary threshold would increase to $58,656 per year, or $1,128 per week. The DOL estimates that the new rule would make 4 million workers newly eligible for overtime, but the lawsuits challenge the new rule would allow overtime payments to an additionally 7.7 million workers, Reuters reported.

The new regulations also offers automatic increases to the salary eligibility level every three years, beginning in 2027, to keep pace with the changing labor market and wages, CNBC reported.

The current salary ceiling for overtime pay is $35,568 per year based on a limit placed in 2019—the first increase since 2004.