The Department of Labor rule was squashed by District Judge Sean D. Jordan, who was appointed by President-elect Donald Trump during his first term in office.
Photo illustration by Justin Morrison/Inside Higher Ed | Getty Images | Rawpixel
A federal judge in Texas has struck down a Biden administration rule that would have expanded overtime eligibility for about four million salaried workers, including thousands of employees at colleges and universities.
The decision, released Friday, comes nearly six weeks before the second phase of the rule was set to take effect. In that phase, employees making less than $58,656 a year would be eligible for overtime pay. The current cutoff, which took effect in July under the first phase of the policy, is $43,888. But in his ruling, District Judge Sean D. Jordan tossed the entire rule, resetting the overtime threshold to $35,568.
Colleges and universities have argued that the Biden administration’s overtime expansion, first proposed in September 2023 and finalized this spring, went too far, too fast and would be “highly disruptive.” They warned that it could lead to tuition increases or layoffs. According to one analysis, nearly 59,000 employees across 882 institutions were set to benefit from the second phase. Those employees included admissions officers, counselors and advisers, student affairs professionals, and athletics staff, though coaches and faculty would have been exempt.
The overtime ruling, which Biden can appeal to the U.S. Court of Appeals for the Fifth Circuit, is the latest legal blow to the outgoing president’s agenda. Biden’s efforts to rework the student loan system, provide debt relief and expand antidiscrimination protections to transgender students are also on hold because of court rulings.
Biden’s Department of Labor said the overtime expansion was necessary to ensure the lowest-earning workers were being properly paid for their time. And organizations like the National Postdoctoral Association, which represents historically low-waged staffers, applauded the rule, calling it “a move in the right direction.”
But the state of Texas and a coalition of business groups disagreed, filing a lawsuit that argued that the policy would drastically increase payroll costs f or employers, resulting in fewer jobs and fewer shifts for workers.
Jordan previously put the overtime rule on hold for state employees in Texas, but this most recent order applies nationally. He found that the Biden administration’s rule went beyond the agency’s authority and that it set the salary component of the test that determines whether an employee is exempt so high that it made other pieces of the analysis, such as the consideration of a workers’ job duties, irrelevant.
“The minimum salary level imposed by the 2024 Rule ‘effectively eliminates’ consideration of whether an employee performs ‘bona fide executive, administrative, or professional capacity’ duties in favor of what amounts to a salary-only test,” wrote Jordan, whom Trump appointed district judge for the U.S. District Court for the Eastern District of Texas in 2019.
Another U.S. district judge used the same reasoning in 2017 to block an Obama-era rule that would have raised the salary bar from $23,660 to about $47,000. The Trump administration, however, was successful in revising the regulation in 2019, raising the bar from $23,660 to the present-day $35,568.
Representative Virginia Foxx, the North Carolina Republican who chairs the House education committee, praised Jordan’s ruling and criticized the Biden administration for what she said is “just one of many bad policies.”
“Once again, the Biden-Harris administration has had its hand slapped for government overreach. Is it ever going to learn?” Foxx said in a statement. “This unworkable rule is drowning job creators in excessive compliance costs and in turn hurting the U.S. economy. I am pleased to see the court recognize that the administration—once again— overstepped.”