Biden’s new overtime rule gets pushback from a Texas court, but here’s what it could mean for small business owners

July 1 – Today was the day that a new rule from the Department of Labor was to go into effect that would provide overtime pay for a whole lot of workers. 

Under this new Biden administration rule that was announced in late April, overtime pay will be extended to salaried employees who make an annual salary of $43,888. It will go up even higher on January 1, 2025 to those workers making $58,656. 

Previously, only salaried workers who made $684 or less each week, or $35,568 annually, were eligible for overtime pay.

The general overtime rule has applied primarily to hourly workers and businesses have been required to pay workers 1.5 times their pay if they work more than 40 hours a week. 

This new rule would include salaried workers that meet these new thresholds and could mean a whole lot of pain for small businesses. 

But Texas is pushing back. 

Attorney Clint Barkdoll said, “Late Friday, a Texas federal district judge blocked that law from going into effect. Now this is tricky, because the decision only is blocking it for now in the state of Texas, but it’s apparently now on an expedited appeal review process, and if you’re in the workplace and affected by that, you might want to talk to your lawyer or your accountant, because there’s a decent chance this whole thing may get blocked in the next few days.” 

Paul Frey, president of the Washington County Chamber of Commerce, said “I just talked to some friends, in Texas only they have an injunction only for state employees. It doesn’t cover the private sector, only for state employees. There’s a couple other lawsuits out there that would keep the dollars from going up today. If you have someone making at the old minimum, about $36,000 salary. If they’re a white collar, they have oversight of employees. If they work independently, those are some of the rules. It’s going to be almost $44,000, so about a $6,000 increase, today, you have to have them pay a salary or put them on hourly, which a lot of businesses are doing, put the managers on hourly to pay them overtime.”

Pat Ryan of NewsTalk 103.7FM said, “Isn’t that amazing that that even got to this point.” 

Michele Jansen of NewsTalk 103.7FM added, “This is a role change by unelected bureaucrats. This is what’s stunning to me. You talk about people who are going to control your lives and everything about your lives. This is a good example.”

Ryan said, “This wasn’t left up to small business. Here’s an excellent example of the Chevron deference.” 

The Chevron deference refers to a court case from 1984 which resulted in a ruling that federal agencies are considered the authorities on statutes or laws that aren’t clear. So they have the final say. 

Jansen noted, “I’m not sure what the genesis of this rule change was, but if it was something left vague in some kind of a law, then yeah and unfortunately, Chevron won’t reverse anything that’s already been done, that decision that was made, it’s only for stuff that hadn’t been done yet, although, technically, you could say it didn’t go into effect yet.”

Frey said, “This was under the radar. I mean, I had a lot of business owners, and frankly, I didn’t hear about it until almost the last minute, what they were doing. The running joke is we have Independence Day this Wednesday and Thursday, but we need some independence from our bureaucrats here in DC, because they’re making these laws up telling businesses what to pay their folks. It’s going to impact nonprofits. It’s going to impact small business owners that were paying folks a certain amount of money. It’s very complicated. If you want to pay your folks now hourly, how do you figure that out? If they’re making $36,000, how do you figure out the overtime? What if they work 43 hours one week, and 48 the next? How do you compensate them fairly for the work? That’s the concern. It’s already hard enough to do business these days, and so we have the federal government, bureaucrats making these rules, not our elected officials, with very little input from business. It’s troubling.” 

“And no recourse,” Ryan added. 

Frey confirmed, “No recourse.” 

On Friday, the US Supreme Court overturned the Chevron ruling from 1984, but it remains to be seen what this will mean for decisions going forward. 

Jansen said, “I can say, for a fact, that this law we’re talking about, it would have been impacted by Chevron, and I don’t know if it’s going to give it any help that lawsuits are already being filed. The Chevron decision has changed, which means you cannot let an agency decide on vaguely worded, or maybe it will help in this case, since the lawsuits are new, and this rule is particularly new compared to others, but they say nearly all the employment and labor decisions that have been made were impacted by that old case that unfortunately gave these agencies too much power. The new Supreme Court decision should at least help us going forward, maybe it’ll help with this.”

Frey suggested, “Contact your US Senators, contact your Congressmen and women and let them know your concerns.”