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Biden's overtime pay rule is being challenged by US business groups

Biden's overtime pay rule is being challenged by US business groups

Written by Danielle Wisner

(Reuters) – A coalition of U.S. business groups has filed a lawsuit to block a Biden administration rule that would extend mandatory overtime pay to four million workers, saying it goes too far.

The groups filed a complaint late Wednesday in federal court in Sherman, Texas, arguing that the U.S. Department of Labor lacks the authority to adopt the rule and would force companies to cut jobs and limit workers' hours.

The rule requires employers to pay overtime wages to workers who earn less than $1,128 per week, or less than $58,600 per year if they work more than 40 hours per week.

The current limit of about $35,500 per year was set by the Trump administration in a 2020 rule that advocacy groups and many Democrats say does not cover enough workers.

The costs of complying with the new rule “will force many small employers and nonprofits operating on fixed budgets to reduce programs, staff, and services critical to the public,” the business groups said in the lawsuit.

The Ministry of Labor declined to comment. In adopting this rule, the agency said low-wage workers often do the same work as their hourly counterparts but work longer hours without overtime pay.

Groups involved in the lawsuit include the National Independent Business Association, the International Franchise Association, and the National Retail Association.

The case was referred to US District Judge Sean Jordan, who was appointed by former Republican President Donald Trump.

The only other judge in Sherman's case, U.S. District Judge Amos Mazzant, dissented in 2017 from the rule that would have raised minimum overtime wages to about $47,000.

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Mazzant said the cap was so high that it would disqualify some employees in the department who are not eligible for overtime pay under federal wage law.

“The Department’s 2024 overtime rule largely repeats the errors of the 2016 rule and fails to correct the errors previously identified by the court,” the business groups said in the lawsuit.

Under the new rule, the salary limit will increase to $43,888 on July 1 and $58,656 on January 1, 2025. Starting in 2027, the limit will automatically increase every three years to reflect changes in average earnings.

(Reporting by Daniel Wiesner, Albany, New York; Editing by Kirsten Donovan, William MacLean)

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